Unable to reclaim VAT....

[revs88]

Hi Guys,

I've been offered a group of gents hairdresser's at seemingly a good price but looks like the current owner has to charge VAT on all his cuts (even children's ones) but can't reclaim back any VAT apart from a small amount on hair products and razors.

Has anybody encountered a solution to this frustrating issue?

Cheers, Richard

[amirzed]

get the staff to go self employed and then the only thing that will be vatable is the rent you charge them

or

if you want to sail close to the wind rent the stylists/cutters the area of ground they occupy, as long as this is in a property that is not opted to tax then the rent will not be vatable

I would pick option 1 if I was you. And make sure your contracts are professionally made with particular reference to the self employment.

[Eric Mc]

If going down that route you do need to be aware of the VAT Disaggragation Rules.

[Ow]

revs88 said:

Hi Guys,

I've been offered a group of gents hairdresser's at seemingly a good price but looks like the current owner has to charge VAT on all his cuts (even children's ones) but can't reclaim back any VAT apart from a small amount on hair products and razors.

Has anybody encountered a solution to this frustrating issue?

Cheers, Richard

Have you looked at the flat rate scheme?

The rate for hairdressers is 13%, so rather than add up your input vat (on hair products etc) you just pay 13% of the gross sales.
That could save you a fair bit if there isn't much input vat to reclaim.

[revs88]

Thanks guys for your comments - Forgot to mention...Turnover is going to be circa £1.5million per annum so assuming flat rate won't be possible.

Cheers, Richard

[Eric Mc]

Correct.

[Ow]

revs88 said:

Thanks guys for your comments - Forgot to mention...Turnover is going to be circa £1.5million per annum so assuming flat rate won't be possible.

Cheers, Richard

Ah ok, assumed it would have been a lower turnover than that!

[wattsm666]

amirzed said:

get the staff to go self employed and then the only thing that will be vatable is the rent you charge them

or

if you want to sail close to the wind rent the stylists/cutters the area of ground they occupy, as long as this is in a property that is not opted to tax then the rent will not be vatable

I would pick option 1 if I was you. And make sure your contracts are professionally made with particular reference to the self employment.

You might want to read this:

http://www.accountancyage.com/aa/news/2162697/vat-...

[revs88]

Thanks Michael...informative yet depressing article :-)

Cheers, Richard