VAT

[Michael]

I'm about to register for VAT and was wondering what the flat rate scheme had to offer.

I've spoke to WindyCity briefly and wondered if any one else was using this and had any opinions?

 

I understand the paperwork is a lot simpler but you can't claim vat on materials.Is it the same for goods for resale?

 

After looking on the hmrc website I see the rate is 8.5% which doesn't seem too bad.

I also saw a cash accounting flat rate scheme.Is this a different scheme again or the same but with a different name?

 

My accountant isn't being much help so I'm looking to change him in the next couple of months.

(I even had to ask him for the forms so I could register for vat!!!) and reading the hmrc website is like reading another language.

 

I would consider myself quite an intelligent person,but I just cannot get a grasp of this tax and vat stuff .It drives me mad, so any help in plain English would be most grateful.

 

Forgot to ask,when I register should I put 8.5% or 17.5% on all my prices (depending on which rate I use) straight away or leave them as they are and add to the prices slowly as normal?

[petercoulson]

the rate for charging is most definitely 17.5%. you will put your vat number on receipts and registered customers can claim it back. the idea with the flat rate scheme is to save both yourself and hmrc time and money so they average the business sector out and tell you the flat rate for you to pay on turnover. as you are a cash and not invoice business going for the cash accounting scheme wont make much difference (you pay on money received rather than money invoiced). in your business it will always be the case that input vat will be much lower than output as your charges are mainly for your time so i think you will always win with flat rate. the exception may be for big purchases like machines but i believe there may be help to get this vat back but a good accountant would have to guide you.

[Hugh-Candoit (ENG)]

Informative reply there Peter, good enough for the Tutorials section!!!!

[Ted Starzec]

We run the flat rate scheme; changing saved us lots of money and Peter is right you can reclaim VAT on large amounts, From memory this is purchases over £2000

[Danny King]

Hi All

I'm intrested in this flat rate. What do you put down on invoices to companies 8% or 17.5%?

 

Danny

[ironplanet uk900]

Personally, I would get your accountant sorted. I would go for recommendations, from a friend or family who run an established sucessful business already.....who do they use.

 

This is the best way to find out what is best for you and your business.

Once your new accountant has all the relavent details of your business, only then can he give an accurate projection of what is best for you.

 

If your business's books are not kept accurately then it will be difficult for anyone to give accuarate advice

 

I wouldn't recommend anyone jumping into it without a lot of thought.

 

I think for our type of business, you wouldn't be any better off. It just makes your vat return easier. !!!

[petercoulson]

you will always put and charge 17.5% danny.

 

the 8 % is what hmrc reckons would be the nett difference between input and output.

 

as planet says a good accountant will guide you but if you have last quarters figures for instance see how much you paid to hmrc then calculate how much you would have paid by taking your gross sales and multiplying by 8%, this is how much you would have coughed up

[ironplanet uk900]

you will always put and charge 17.5% danny.

 

the 8 % is what hmrc reckons would be the nett difference between input and output.

 

as planet says a good accountant will guide you but if you have last quarters figures for instance see how much you paid to hmrc then calculate how much you would have paid by taking your gross sales and multiplying by 8%, this is how much you would have coughed up

 

Also, HMRC might not agree to 8% its not the same for all companies it may be 12%

[windycity]

good advice from peter, uk and ted.

michael uk is right you need to get a new accountant asap and they will advise you accordingly.if memory serves me right the flat rate for our trade is 10 or 11%

this amount may seem small to start with but its abig amount of money to lose each week and also you'll have accountant fees for your vat returns and a bit more timespent on paper work.

but you need to act on this now not in two weeks time.

[Michael]

Also, HMRC might not agree to 8% its not the same for all companies it may be 12%

 

From what I've read on HMRC website this scheme is broken down into sectors.There is a sector for "repairing personal and household items"

which is set at 8.5%,so I'm going for that

[ironplanet uk900]

Also, HMRC might not agree to 8% its not the same for all companies it may be 12%

 

From what I've read on HMRC website this scheme is broken down into sectors.There is a sector for "repairing personal and household items"

which is set at 8.5%,so I'm going for that

 

All I would say Michael, is make sure your fully aware of all the fors and againsts.

Its not as good as it may sound !!!!!! And you could easily be worse off. HMRC don't give anything away.

[petercoulson]

Michael,

 

check with ted what flat rate he pays as this will tell you the sector rate

[keithm]

And get a new accountant PDQ