Advice for VAT

[dhrowland]

Hi all,

I need some advice for going VAT.

I am very close to the VAT threshold and I may surpass it next year. Many people have said not to go over the threshold as it is a headache when it comes to customers. I have a range of work from £20 a house to £360 all window and gutter cleaning. How do I navigate the 20% increase? Do I add the 20% to every house or do I absorb the cost? Has anyone got any advice on this? What did you do in the early stages of going VAT?
Thanks

 

[Part Timer]

Hi all,

I need some advice for going VAT.

I am very close to the VAT threshold and I may surpass it next year. Many people have said not to go over the threshold as it is a headache when it comes to customers. I have a range of work from £20 a house to £360 all window and gutter cleaning. How do I navigate the 20% increase? Do I add the 20% to every house or do I absorb the cost? Has anyone got any advice on this? What did you do in the early stages of going VAT?
Thanks

If you do go VAT registered and put your prices up 20% then, me personally, I would lose a lot of my work as the big residential blocks of flats I do are VAT sensitive. Again personally I think you have 2 options, keep below or get your turnover up by £30k

 

[ched999uk]

Just so you know the threshold is a rolling 12 months not per tax year.
If you absorb the 20% you will be working a lot harder to get the same money!
There is another vat scheme where by you pay a fixed % on turnover which might work out better. Best to discuss with your accountant.

 

[JohnDoeWindows]

I have no idea if this is allowed or not and I wouldn't advise it without speaking to an accountant, but I know of another window cleaner that split his business into two companies when he reached the VAT threshold. One carried out commercial jobs, pressure washing, gutter clearing etc and charged VAT - the other was for residential window cleaning. To me it sounds a bit dodgy and I don't know if he will get away with it long term

 

[Iron Giant]

Personally if you are a sole trader, then my take is why on earth would you want to give £17,000to HMRC by hitting the vat threshold you need to cover that expense and then some as advised above,

because we are all getting right royally screwed on tax it's now 38% of GDP I read this morning.

My accountant tells some to take extra time of with their families thus reducing their turnover,

I'd personally do this and reduce my customer base and drop add on's if needed but I only do add ons on rare occasions.

It really depends on your own personal circumstances and if you see yourself going way beyond the threshold in the future.

 

[Pjj]

I have no idea if this is allowed or not and I wouldn't advise it without speaking to an accountant, but I know of another window cleaner that split his business into two companies when he reached the VAT threshold. One carried out commercial jobs, pressure washing, gutter clearing etc and charged VAT - the other was for residential window cleaning. To me it sounds a bit dodgy and I don't know if he will get away with it long term

That’s a sure way to a big fine ???

 

[JohnDoeWindows]

That’s a sure way to a big fine ???

His name is Chris Addis/Estuary Cleaning on YouTube I believe he has videos on the subject too, if you can be bothered to check it out ??

 

[ched999uk]

His name is Chris Addis/Estuary Cleaning on YouTube I believe he has videos on the subject too, if you can be bothered to check it out ??

He is just up the road from me and I have met him. He has said on his vids that his accountant has advised him how to do it legally but I'm not convinced.
I thought you had to completely separate things i.e. not use the same vehicles, nor phone numbers, can't share equipment etc.
If HMRC see his vids he basically says he is doing it to avoid the vat threshold which would probably be enough for HMRC to fine him.

 

[Cghwindowcleaning]

If you are mainly residential then you will always be 20% more expensive than the cheapest in your area.This is something to thing about.
if you’re already on the dear side how much new work would you bring in with another 20% on top.Which could slow your growth down.
There’s no point just going over you need to get past the 100+k mark rapid.if you want to grow it’s just part of the process and You really have no option.
Our industry isn’t very material and expenses heavy so it may be worth looking at what you would claim back in vat on an average year.

Commercial can claim it back so not such a problem.

 

[JohnDoeWindows]

He is just up the road from me and I have met him. He has said on his vids that his accountant has advised him how to do it legally but I'm not convinced.
I thought you had to completely separate things i.e. not use the same vehicles, nor phone numbers, can't share equipment etc.
If HMRC see his vids he basically says he is doing it to avoid the vat threshold which would probably be enough for HMRC to fine him.

He also has sub contractors that work solely for him and use his vans and equipment, again supposedly told that this was fine by his accountant. Dodgy if you ask me

 

[scottish cleaning service]

He also has sub contractors that work solely for him and use his vans and equipment, again supposedly told that this was fine by his accountant. Dodgy if you ask me

Pimlico Plumbers spring to mind.

 

[Yogi1872]

I was at this cross roads too, it just didn't make sense to go over it. I ended up getting rid of work.

 

[dhrowland]

If you are mainly residential then you will always be 20% more expensive than the cheapest in your area.This is something to thing about.
if you’re already on the dear side how much new work would you bring in with another 20% on top.Which could slow your growth down.
There’s no point just going over you need to get past the 100+k mark rapid.if you want to grow it’s just part of the process and You really have no option.
Our industry isn’t very material and expenses heavy so it may be worth looking at what you would claim back in vat on an average year.

Commercial can claim it back so not such a problem.

Thanks for the comment. it is very frustrating as i want to grow the business but the government make it really hard to build up.

 

[Yogi1872]

Thanks for the comment. it is very frustrating as i want to grow the business but the government make it really hard to build up.

When you look at how much your cost is to hire someone ie employers ni, pension, holidays, sick days. I think you'd need to have work for atleast 4 to 5 guys to make it feasible. That's some jump in work that could take years to accumulate.

Vat isn't even really aimed at the buisness either as its passed onto the customer, most trades are buying materials for jobs so they claim that vat back anyway. For sole traders like us who's not going to be claiming lots of vat back there should be a much higher threshold. With everything banks now there would have been alot of people at this cross roads.