Vat

[Stitch Up]

The 3 letters VAT send a shiver down my spine but, we've just registered. I have previously been registered for VAT so have some knowledge about it.

Interestingly, you are able to reclaim VAT on goods/hardware you purchased up to 4 years before registration & I believe, for services up to 6 months before registration. Of course the rules are quite strict for obvious reasons but it's attractive particularly if you've made significant purchases as we have.

The rules can be read on the IR site.

We decided to register for VAT because we're doing more work for businesses that are registered too, so they can reclaim the VAT, also, it helps enormously when importing good from abroad.

Cheers

John

[bms]

What makes it attractive with regards to importing StichUp? The VAT still has to be paid as a lump sum

[Stitch Up]

I've had BIG problems with my stuff getting stuck in customs awaiting completion of EORI forms meanwhile, my white inks are settling as they should be shaken at least every other day. My inks were ruined after 5 weeks of delays!! This would have been avoided had I been registered.

VAT registered or not, the VAT has to be paid up front

[bms]

I see. The other benefit of VAT registration is you don't pay VAT when buying goods from business in Europe which can help with cash-flow initially. Just means vat is recovered without any offset when you sell.

[accdave]

Did you register voluntarily or because you had to ?

I had a thread running a short time ago wether to register to start targetting more businesses. Still not decided yet

[Stitch Up]

Did you register voluntarily or because you had to ?

I wish our turnover was that high

I had a thread running a short time ago wether to register to start targetting more businesses. Still not decided yet

It's a difficult decision. We do have one customer who required us to register as they don't/wont deal with unregistered businesses.

[John G]

We had the same problem as stitch up, when we started 8 years ago a large customers of ours wouldn't deal with us unless we were vat reg. We are now in two minds whether to come out of the vat scheme as we don't get the same volume of work from that customer and basically, we'd be better of if we didn't act as collectors for the government.

[Kaz]

Make sure you apply to join the flat rate scheme, save you paying 20% to HMRC even though that's what you charge customers

[DREAMGLASS]

I know someone that runs a thriving business, that decided to break their business down into several smaller ventures, each falling below the VAT threshold. As they primarily supply to business I enquired why she had done that, as it had to create a lot more paperwork etc.

It appears that some time ago the delightful VAT people nearly bankrupted her then fledgling business by fining her for overdue VAT returns and then empowering bailiffs to recover the money thus raising the bill even further. This was despite them being made aware of the fact she had been involved in a high speed collision on the motorway, was in a coma for nearly three months on life support machines and nearly lost her life. Despite being given letters from her solicitor and confirmation letters from the hospital concerned, they still pushed ahead with the fine and all the massive costs that had built up since then.

Dealing predominantly with other businesses does cause her some problems with no longer being VAT registered, but she says she is happy to break down her venture into a hundred smaller companies if need be, rather than have any dealings with them again.

[Stitch Up]

Interesting post.

I have to say, I've always found the VAT people most helpful and never had a problem with them. I do wonder if 'ALL' the facts are disclosed in this instance.

John