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Charging VAT to domestic customers?

PureShine

Active member
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241
Location
Sutton Coldfield
I'm not far away from VAT threshold now and am wondering how others have managed this in regards to domestic customers? Did you add the charge onto existing customers or just take the hit on the chin?

VAT is the one thing that is putting me off pushing growth as I don't want to charge it to customers for fear of losing loads of them, but also not wanting to have to cough up out of potentially what could be my own takings. Any ideas/advice appreciated.

 
I am commercial and went VAT regged recently enough, tedious process I must say and some will not like it that is a fact. I've lost 2 customers since VAT and one was a big name retailer but I will get 4k back off the van I bought and i'll claim back as much as I can on other things. Rate is 13.5% over here, could you up your prices and eat the VAT? I could see some domestic customers having issue with paying it to be honest here in Ireland.

 
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What I did was put all prices up 5%. Then took the hit. I saw it coming 6 months ahead, so all the jobs quoted in that period were priced with vat in mind.

You can find efficiencies elsewhere to compensate for it.

 
I am commercial and went VAT regged recently enough, tedious process I must say and some will not like it that is a fact. I've lost 2 customers since VAT and one was a big name retailer but I will get 4k back off the van I bought and i'll claim back as much as I can on other things. Rate is 13.5% over here, could you up your prices and eat the VAT? I could see some domestic customers having issue with paying it to be honest here in Ireland.
My commercial customers wont have an issue with this. Its the domestic side of the round that bothers me as i think i will lose quite a lot of customers. I think its 16.5% on net turnover here for cleaning services or 15% flat rate on gross turnover but then cant claim any vat back.

What I did was put all prices up 5%. Then took the hit. I saw it coming 6 months ahead, so all the jobs quoted in that period were priced with vat in mind.

You can find efficiencies elsewhere to compensate for it.
I have thought about this, even putting the prices up by £1 or £2 will help. I am going to start pricing this way with all new custys, its the drop off from the current ones that bothers me.

 
You can claw back vat on previous purchases (3 years?? Can’t remember) of non consumable stuff. That may go a way to helping negate the initial hit.

 
Good to know i can claim back for all eligible purchases while i havent been registered then.

Im looking at this almost as if once the threshold is reached you basically need to blast past it very quickly. 

If you intend to do the VAT yourself look at the Fixed Rate Scheme, personally believe you make a profit on it and it saves you loads of time and hassle. 
I have been looking into this but have been reading that on flat rate you are unable to claim vat back on goods/services. Many people have said this is a good way. If i could charge 20% vat to the customer then pay the fixed rate it may bring a profit, but i dont feel i can charge the vat to a domestic customer

 
I have been looking into this but have been reading that on flat rate you are unable to claim vat back on goods/services. Many people have said this is a good way. If i could charge 20% vat to the customer then pay the fixed rate it may bring a profit, but i dont feel i can charge the vat to a domestic customer
Well if you do hit the threshold you will either have to register or sell off some work. If you do go VAT registered you will need to grow your business some more to take the hit yourself. At the end of the day if you do go VAT registered it will be best. in my opinion, to do it using the Fixed Rate Scheme. Remember when first registering you can chose one or the other. If you chose the Fixed Rate and don't like it you can change to the normal VAT method. However if you chose the normal method then find out Fixed Rate is better you can't change to it.

 
Well if you do hit the threshold you will either have to register or sell off some work. If you do go VAT registered you will need to grow your business some more to take the hit yourself. At the end of the day if you do go VAT registered it will be best. in my opinion, to do it using the Fixed Rate Scheme. Remember when first registering you can chose one or the other. If you chose the Fixed Rate and don't like it you can change to the normal VAT method. However if you chose the normal method then find out Fixed Rate is better you can't change to it.
I didn't realise you could change from fixed to normal but not the other way round. I think i will give the fixed a try first and from what youve said it doesn't sound too bad either. I spoke to accounant not long ago and he advised i split my work into different businesses so none of them will ever reach vat threshold, he advised each time one business nears the vat threshold i open a new business and sell work from the one to the other, reducing turnover. I looked into this as it didnt feel right... im glad i done my homework as this is clear tax avoidance and definitely not legit

 
I didn't realise you could change from fixed to normal but not the other way round. I think i will give the fixed a try first and from what youve said it doesn't sound too bad either
You better get this clarified as this rule applied 12 years ago so might have changed. You can set up a Limited Company and get them to buy work from you as a sole trader, you can't do it twice though. Again clarify the above but my Accountant said it was 100% legit.

 
Im already set up as Ltd. The accountant wasnt saying to do this once, he was suggesting I continually transfer work to different new companies i set up. Each time i get close to threshold open a new company and put all the new work on that company so none of them will ever hit vat limit.

 
I didn't realise you could change from fixed to normal but not the other way round. I think i will give the fixed a try first and from what youve said it doesn't sound too bad either. I spoke to accounant not long ago and he advised i split my work into different businesses so none of them will ever reach vat threshold, he advised each time one business nears the vat threshold i open a new business and sell work from the one to the other, reducing turnover. I looked into this as it didnt feel right... im glad i done my homework as this is clear tax avoidance and definitely not legit




Don’t do it!!!! HMRC will not approve.

Change your accountant sharpish.

 
Don’t do it!!!! HMRC will not approve.

Change your accountant sharpish.
From all the things I am reading so far it basically seems even though they may be separate enities, separate accounts, staff, phone numbers etc they have a common interest so the hmrc would deem the turnover over of both entities be classed as one turnover. Also there are fines on top. It just seems dodgy and makes me feel unsettled. I will still see a different accountant, will ask the question out of interest wether it can be legitimately done. Either way i think im just going to up current customers prices by 10% and take the hit on the remaining amount. Whatever new work comes in will be priced at 20% vat on top regardless. Whatever i lose i will replace and that be that. Im really not prepared to take the full amount out of my own pocket. 

 
don’t forget the time it’ll take you to process the vat returns. You have to charge for that too!

 
don’t forget the time it’ll take you to process the vat returns. You have to charge for that too!
How do you mean? I thought the accountant would deal with all of that, or is it something I have to do?

The Fixed Rate Scheme takes 10 minutes a quarter, assuming you're on top of your paperwork
I am on the ball with paperwork. I'm quite certain now that I will be going on flat rate when the time for registering comes. I don't make lots of purchases and always try to spend only what i need to make working days easier so won't have much to claim back.

 
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