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Replies
A customer of mine thinks it takes about six months for a VAT increase to bed down and for people to accept it.
On the plus side being VAT registered means that you can reclaim the VAT on your imputs to offset against your output tax, this in effect means that grossing up your price against an un VAT registered competitor should be a bit more competitive than a 20% difference, all other things being equal. .
If you have a design side and it has less in the way of purchases then it would be sensible to see whether it would work out better to seperate it off. Your accountant should be able to suggest the best way forward.
We have had to go VAT reg from January of this year, as we are putting up prices in April anyhow we have decided to absorb the VAT bill till then as we should be due a rebate anyhow in the 1st return and its a good from a cutomer PR point of view.
However one client wanted to change her garden maint package to a fixed price per month which was fine until I said about VAT and "shes looking at her options" so when the rest of the clients have to pay the VAT I'll see how it effects the business.
I agree that its nots adding 20% to the bill, when you factor in the amount you can re-claim but is still about 10%? as a business that runs more maint has less VAT to re-claim.
Personally this is the 1st time I have been worried about the business future but I have had to go VAT reg and time will tell. Interesting to hear from other business that have gone VAT reg and how they got on, did the clients just up sticks and go to a cheaper option or was it not as bad as feared? We have a range of clients from weathly to working class.
Dan said:
As a commercial gardener whos main costs are fuel I feel that becoming reg would not help our business at all.
Splitting your business has been bounded around by a few people but like that great link that rowly posted it's hit and miss and until there's a legitimate and legal way to do this it's not worth the risk. It would be interesting to find out if other members have done this and how.
When dealing with the public I quote prices including VAT, the retail pricelists and the websites all show prices including VAT, the only additional charge is for delivery which is often a bit more tricky.
Business customers are quoted VAT exclusive prices as they generally can claim the VAT back.
You are right to think that way Martin,
If you service "commercial sites" that can't reclaim the VAT back and you have little valid expenses to off set your own VAT to be recovered, it will be hard to maintain your current prices without taking a hit or passing the VAT on to the client.
I fear that if in your circumstances if you were to add VAT to all of your commercial contracts then the uplifts that perhaps you enjoyed previously for additional work may well be put on hold.
May be a new discussion in the Business Group?
martin said:
Guy,
I don't think that the VAT increase to residential clients is the major factor in most of the cases.
If a company was currently VAT reg and then the price increase would be 2.5% plus any other increase you may apply.
However if going VAT reg for the first time and you provide services to members of the public, registering for VAT wil have major implications for your pricing structure. Your existing clients may think twice if you hit then with a 20% + increase. Maybe under these circumstances by looking at what you can reclaim back against and use this to help soften the blow.
Have you checked out the “cash accounting” scheme means that you only pay the VAT to Customs after you have been paid by your customer. The “Flat Rate Scheme may be a better option for you as well.
Yes VAT at 20% will be hurtful but with careful planning and sensible pricing it can be managed without too much pain. It will in time be even better as your business grows and you move away from being a one man band service provider and offer a wider range of services.
ROWLY HILL said:
If not stay under the threshold, no point in doing 2-3 extra weeks work for zero return. You could put that 2-3 weeks to good use, working on a longer-term marketing strategy, read books, networking, go on holiday…
New discussion in the private group
http://www.landscapejuicenetwork.com/group/keyobjectivesprivategrou...
This discussion is aimed at how businesses have or will be addressing registering for VAT.