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as a one man band i wish i was even close to that level of income
Roy, it's not your level of income, but your turnover that pushes one near to that VAT limit.
That's one of the problems, especially if you are a hardscaper etc, where you purchase, lay/install expensive or volume products.
Sole Traders/Contractor's providing mainly manpower services often don't reach near that limit luckily (?)
Also, what's that old saying ..."Turnover is vanity, Profit is sanity" ;-)
The turnover for VAT is in any running year so if you have a few good months you can soon be over the VAT threshold.
When I ran my building company I was VAT registered & hated it, felt like I was being watched by big brother, was a unpaid tax collector, had insurance in case the VAT man wanted to do a check, charted accountants doing all my books so I could just get on with running a company.
Glad to be out of that rat race leave me to my lawns & other bits and bats any time my hair might even start to grow back.
yes it is turn over still for garden maintenance it is way off where i am. even the few fences i do my turn over is way below this level but it is not all bad being vat registor there are lots you can claim back to but does make for more paper work
Gary RK said:
My original post was all about those who should be registered for VAT, but who aren't. HMRC has declared war on them, presumably because they already know who some of them are, but are giving a small amount of time to fall into line. If anyone's turnover (calculated over a rolling 12 month period) is below the registration level, you have nothing to fear, or do.
For those smaller VAT registered businesses, the process of accounting for VAT can be simplified by applying for, and using, the flat rate scheme. If you do, you don't deal with VAT on any costs and expenses (so can't get that wrong) and it is only calculated as a percentage of income receipts. If a customer still owes you money at the quarter end, you don't have to pay any VAT over, as you can also calculate on a cash accounting basis.
VAT registration shouldn't be making record keeping more complicated as you should be keeping regular records anyway.
Yes you can claim it back on your expenses but it still penalizes legitimate business. In order to compete with non vat reg gardeners we often have to discount our service by 20% to get the work.Other gardeners keep themselves below the threshold and top up their income with cash in hand work so its a win win situation for them, no vat and no income tax either. Hence artificially low prices in the gardening sector.
Its not just us, many other trades suffer the same problem. It seems to me that the system encourages fraud.
You cant blame the customers either, they've already paid income tax on their wages so then why the hell do they want to pay another 20% when they spend it.
roy parker said: