Welcome to the UK Window Cleaning Forums

Starting or own a window cleaning business? We're a network of window cleaners sharing advice, tips & experience. Rounds for sale & more. Join us today!

Letters to customers increasing price due to VAT?!

luca

Active member
Messages
256
I want to send a letter out to residential customers saying all invoices will include VAT from now on... or do I just swallow the 20% then increase them a bit next year?! Commercial will eclipse residential this year and they will include VAT so no problem but it's still going to be a straight 20k or so loss on residential?! BUT we stay safe and don't lose or upset people... I would love the voice of experience on this...

 
Last edited by a moderator:
I want to send a letter out to residential customers saying all invoices will include VAT from now on... or do I just swallow the 20% then increase them a bit next year?! Commercial will eclipse residential this year and they will include VAT so no problem but it's still going to be a straight 20k or so loss on residential?! BUT we stay safe and don't lose or upset people... I would love the voice of experience on this...
Are you turning over 83k+? Or are you like green and just charging VAT on all jobs below the threshold?

Question; If you're over 83k and lost some work due to charging VAT where would that leave you?

 
I've just had to do exactly this about a month ago. I decided to increase the prices as I'd rather lose a few clients than pay the vat (let's say the vat would be 20K, I reasoned I'd rather lose 20K of work than swallow the 20k myself. If we did lose 20k of work, as worst case scenario, it would've been the same as swallowing the vat myself).

Felt risky, but sent letters, and to date we've lost only 1% of our clients.

Keep us updated on what you do

Sent using the Window Cleaning Forums mobile app

 
Last edited by a moderator:
Writing customers a letter to say they will see a increase because of vat will set off alarms to them thinking you are earning far to much £83k a year.

And someone correct me if I am wrong but according to the HMRC you have to charge the vat once registered

Sent using the Window Cleaning Forums mobile app

 
If your VAT registered then VAT has to be charged or shall we say collected. You become an unpaid collector of taxes for HMRC in fact it costs you to actually collect it.

 
Writing customers a letter to say they will see a increase because of vat will set off alarms to them thinking you are earning far to much £83k a year.Sent using the Window Cleaning Forums mobile app
You could word the letter slightly different i guess, something along the lines of "Due to the proportion of commercial work we now do, we have had to go VAT registered........."

Gives them the impression that its because of dealing with businesses rather then the fact that you're earning shedloads./emoticons/biggrin.png

I find customers reasoning on such matters baffling - either they are happy with your job & price or they aren't - your annual income shouldn't have any bearing on it....

Personally i do EVERYTHING i can to avoid becoming vat registered. I can't see any advantage whatsoever and as 'Alec' says you just become an unpaid tax collector - well blow that for a game of toy soldiers! Let them collect their own tax!:mad:

 
Off the subject I spoke to my accountant the other week about different options to reduce my tax bill in the future, The first advised option was to make my wife a partner in the business and pay her a percentage this is a viable option for us going forward

Then the second option was to become a limited business it all depends what works best for each individual and their own personal circumstances .

 
Off the subject I spoke to my accountant the other week about different options to reduce my tax bill in the future, The first advised option was to make my wife a partner in the business and pay her a percentage this is a viable option for us going forward
Then the second option was to become a limited business it all depends what works best for each individual and their own personal circumstances .
Neither of these would affect wether or not you pay V.A.T. that's purely a turnover situation.

I would have a price rise (not 20% unless they will swallow 20%) and blame it on the new budget etc.

You don't have to 'charge' VAT but you do have to pay it over of course.

What I mean is if you have a £10 custy you don't have to say 'Right, that's £10 plus £2 V.A.T.' (I see that not going over well) all you have to do is give them a receipt with V.A.T. number on.

So more like 'That's £12 luv, thanks, heres your receipt, see you next month'

As long as the receipt has your VAT reg number on it you are complying with the rules. No need to go telling them all you're VAT registered as mentioned earlier this could fire alarm bells in granny Smith.

 
Actually green your wrong. If you are charging vat it MUST be stated how much vat is charged on every invoice. Invoicing and taking payment from customers - GOV.UK
Sent using the Window Cleaning Forums mobile app
I don't think that's what he meant.

You don't have to verbally tell your customer that you are charging them VAT and make a thing out of it, in case you are concerned how your custy would feel about it. Obviously it would be on the receipt and its up to them to read it.

Also he is correct about VAT, its based on TURNOVER.




Adjusting your tax bill has no impact on the amount of cash you've charged for work done. Get VAT registered or do less work or reduce your prices!!

 
Actually green your wrong. If you are charging vat it MUST be stated how much vat is charged on every invoice. Invoicing and taking payment from customers - GOV.UK
Sent using the Window Cleaning Forums mobile app
I don't think that's what he meant.

You don't have to verbally tell your customer that you are charging them VAT and make a thing out of it, in case you are concerned how your custy would feel about it. Obviously it would be on the receipt and its up to them to read it.

Also he is correct about VAT, its based on TURNOVER.




Adjusting your tax bill has no impact on the amount of cash you've charged for work done. Get VAT registered or do less work or reduce your prices!!

 
@Chelmsford Cleaning \- Sam

Follow the link you posted. Scroll to the bottom of the page and follow that link.

Screenshot_20170320-142430.png

Then click on the link shown in the picture that says VAT invoices.

Read the information regarding 'simplified invoices' for customers that are not themselves VAT registered and are below £250 (per invoice) you do not need to show a VAT breakdown. Just your VAT number.

This information was ascertained from following the link that you posted mate on the HMRC site so is 100% accurate.

The information I posted previously was ascertained from the chartered accountant we keep on payroll, still, nice to be able to verify what he tells me. :thumbsup:

However if you are billing a client that is VAT registered then I would suggest the breakdown is shown on the invoice.

 
Thanks for all the replies... I had no idea!! My app only shows me some things sometimes... i feel like I've missed the boat on having a conversation now...I appreciate all the answers and have read them all now [emoji1303][emoji1303][emoji1303]

Sent using the Window Cleaning Forums mobile app

 
Last edited by a moderator:
Off the subject I spoke to my accountant the other week about different options to reduce my tax bill in the future, The first advised option was to make my wife a partner in the business and pay her a percentage this is a viable option for us going forward
Then the second option was to become a limited business it all depends what works best for each individual and their own personal circumstances .
Mine told me that you should only consider going limited if you're turning over 50k per annum and then there is a lot more paperwork and also the accountants bill rises considerably.

 
A good account will pay for themselves with the savings they make you every year! You can claim allot of VAT back on all types of things also only if your VAT registered.

 
So for those still interested in the subject we're going limited as of April then I'll be paying my self a minimum all year then take a dividend at end of year... there will be another share holder (my misses) to keep the dividends under 80k as otherwise would be paying 40% tax, as long as under 80k per shareholder we all pay 20%... as I understand it... a bit more complicated than that but that's an overview. Also there are more expenses but I'm aspiring to grow the company so have to risk it... and can only grow so much being a Del Boy forever... hopefully fortune favours brave [emoji1317] (and the hard working [emoji6]) VAT is just part and parcel of growing... we're never gonna turn over a million if we're trying to avoid showing 83k [emoji848][emoji85]

Sent using the Window Cleaning Forums mobile app

 

Latest Posts

Back
Top