Any sole traders VAT registered?

[GerdingA]

Are there any sole traders on here who have gone VAT registered? Id like to know how it panned out for you.
I’m not looking to hire anyone and expand in that regard. I’m cutting it fine with what I bring in and with them not changing the VAT limit for a few years and my annual price increases only make things worse (better), decisions need to be made. I’m just under 50% commercial and the majority of residential job pay online. From what I gather there’d be pros and cons were I to register.

Thanks

 

[Yogi1872]

If all domestic I don't see any benifit in crossing it. I've had to scale back a bit because I felt by just crossing it wouldn't be worthwhile. If I had enough work for 3 or 4 guys and myself I'd have done it. Crossing it when there was only 2 of us didn't make sense to me. You don't tend to pick up enough work for another 2 or 3 guys in a few months either, that realisticly could take years and there's a good chance you might never get to having that much work.

 

[scottish cleaning service]

The Vat threshold is £85k so if one is wanting to head a lot over it then one would be better Limited Company I would have thought. ?

 

[Part Timer]

You must have a good business to get there on your own. If you do go the VAT route have a look at the fixed rate scheme.

 

[Yogi1872]

When I was at a cross roads after a few minutes I thought aha, il just split the work between 2 sole trader names, thought I had cracked it. When I was on hmrc site there's an actual name for this and its ilegal. I should have known tbh, big companies pay thousands to top people to avoid things. If an idiot like me thought of this in a couple of minutes then ofcourse it's not going to be allowed.

I then googled something like man avoids paying vat for 5 years to see what the punishment would be if I didn't tell them, its a jail sentence, I've no problem with people who bend some rules, it does my head in if they act like a victim if they get caught though. Actions have consequences, if your not prepared for to accept the worst possible outcome if caught then don't do it in the first place. After seeing a jail sentence would be the outcome that pretty much made my mind up that it was a no go.

Thinking back I think I made the wrong choice, I didn't realise if I did get caught all I had to do was put a skirt on and say I'm a woman. I'd then be locked up 24/7 surrounded in muff. So the worst case scenario would have seen me knee deep in it for a few years. I'd probably have phoned up hmrc myself after a few years and gave them an anonymous tip off about what I'm doing to get locked up with all the birds.

 

[Part Timer]

Thinking back I think I made the wrong choice, I didn't realise if I did get caught all I had to do was put a skirt on and say I'm a woman. I'd then be locked up 24/7 surrounded in muff. So the worst case scenario would have seen me knee deep in it for a few years. I'd probably have phoned up hmrc myself after a few years and gave them an anonymous tip off about what I'm doing to get locked up with all the birds.

They would also have taken you to the cleaners financially

 

[ched999uk]

I believe HMRC can go back 7 years and it's guilty until you can prove otherwise!!!
Never mess with VAT, too risky.

 

[Yogi1872]

They would also have taken you to the cleaners financially

I know, I researched it quite a bit when I was deciding what to do. Was actually quite surprised how harsh they come down on people who don't follow there rules. With cash in hand virtually wiped out its pure stupidy to do anything you shouldn't as everything has a trail now with online paymeants. They don't just have the authority to check your bank, they can get access to family members too of they like.

 

[Part Timer]

I know, I researched it quite a bit when I was deciding what to do. Was actually quite surprised how harsh they come down on people who don't follow there rules. With cash in hand virtually wiped out its pure stupidy to do anything you shouldn't as everything has a trail now with online paymeants. They don't just have the authority to check your bank, they can get access to family members too of they like.

The tax man and the VAT man have far more powers than the Police. The biggest difference though is with the Police you're innocent till proven guilty. With HMRC you're guilty unless you can prove you're innocent.

 

[Iron Giant]

I don't think there are any pros to going vat registered as a sole trader who has no intention of employing or expanding their business why on earth would you hit the limit and have to hand over £17,000 in vat far better to sell off some work and stay below the vat threshold.

 

[Part Timer]

I don't think there are any pros to going vat registered as a sole trader who has no intention of employing or expanding their business why on earth would you hit the limit and have to hand over £17,000 in vat far better to sell off some work and stay below the vat threshold.

He's nearly 50% commercial so should be able to charge those VAT, on top of his current price, without any problems so he's really looking at losing £7.5k on his residential work. With the Flat Rate Scheme on say £25k a quarter turnover he would be paying HMRC £3600 a quarter but getting an extra £2400, 20% VAT on £12k, from his commercial clients so really only £400 a month worse off.

 

[Yogi1872]

With online payments being the preferred way now, it makes it harder for our side I'd say. I don't think it's worthwhile unless you have enough work for 5 people tbh. It would have been alot easier to grow and stay under it years ago when it was cash paymeants. Unless you have a chance of getting alot of work at the same time to cross it then I just don't think it makes much sense. A really successfull buisness profits margins are around the 20% mark. That's the figure I sort of had in mind when thinking it over. It might be low considering the outgoings isn't bad for our work. Take into consideration though it's not just the workers hourly rate, you have ni to pay for them, you have to pay into a pension, someone could end up being 6 months off work sick while you have to pay sick pay every week.you have holiday pay to cover, People will think it's easy to run but there's alot of responsibility involved for the person and I bet they will get stressed quite a bit when dealing with it.

 

[Iron Giant]

He's nearly 50% commercial so should be able to charge those VAT, on top of his current price, without any problems so he's really looking at losing £7.5k on his residential work. With the Flat Rate Scheme on say £25k a quarter turnover he would be paying HMRC £3600 a quarter but getting an extra £2400, 20% VAT on £12k, from his commercial clients so really only £400 a month worse off.

I missed the bit about the commercial percentage, if anyone has enough experience to advise it's you