It appears I can earn no more.
Discussion
This is more of a rant really but...It seems to me that I am stuck earning what I do now in my current business for the rest of my life. I run a bathroom installation company and use 3 other sole traders to carry out the work, as well as myself. The guys are paid directly so this keeps my turnover down. I stopped supplying the suites last year to drop below the VAT threshold. So now I hovver within a grand or two under the threshold.
So this is good.
However this year has started off with a shed load of work and to really benefit from it, I need to get it done sooner. This means extra income..hooray. Not so fast sunshine..The VAT man says 'if you take on extra work, I will make you pay VAT and after all the effort of working much harder, I'm gonna leave you worse off than when you took the extra work on!' This seems to be the way for the small man in an industry that serves the public.
The f***ing hole just gets deeper!
So this is good.
However this year has started off with a shed load of work and to really benefit from it, I need to get it done sooner. This means extra income..hooray. Not so fast sunshine..The VAT man says 'if you take on extra work, I will make you pay VAT and after all the effort of working much harder, I'm gonna leave you worse off than when you took the extra work on!' This seems to be the way for the small man in an industry that serves the public.
The f***ing hole just gets deeper!
Not really correct.
The VAT man makes you charge VAT to your customers and then pay that to the VAT man. Your personal income is unaffected.
You may argue that the addition of the VAT makes you uncompetitive in your local market and your income will drop but that's a different matter, but if it does you can de-register.
The VAT man makes you charge VAT to your customers and then pay that to the VAT man. Your personal income is unaffected.
You may argue that the addition of the VAT makes you uncompetitive in your local market and your income will drop but that's a different matter, but if it does you can de-register.
PurpleMoonlight said:
Not really correct.
The VAT man makes you charge VAT to your customers and then pay that to the VAT man. Your personal income is unaffected.
You may argue that the addition of the VAT makes you uncompetitive in your local market and your income will drop but that's a different matter, but if it does you can de-register.
Yep, I see your point. But the problem I have is simply getting no more work if I add 20% to it. I've registered before and whenever I tried to put VAT on a job for Joe Public, I lost the work. I spent years paying VAT that I didn't take! This is why I had to drop below the threshold. So, no more increase in income without being VAT registered no?The VAT man makes you charge VAT to your customers and then pay that to the VAT man. Your personal income is unaffected.
You may argue that the addition of the VAT makes you uncompetitive in your local market and your income will drop but that's a different matter, but if it does you can de-register.
ikarl said:
What would you suggest as an alternative?
I just can't see an alternative. I'd love to take on more work and increase my income, but if I try I will get less. I have only ever been above board, but no wonder other people pocket cash. I've often described my industry as being like a ladder..I'm on rung 2 but 3,4 & 5 are missing so the next step is huge. But also this huge step means VAT which brings me right back to the bottom again because the public simply will not pay it. Snakes and Ladders is what it is.Eric Mc said:
If I was Chancellor, I'd bring the VAT registration threshold right down so that virtually ALL traders had to register. It would make a much more level playing field and stop this nonsense of people deliberately stopping their business growing for fear of having to VAT register.
Absolutely spot on Eric! Because I aspire to a better life and I'm not shy of working hard for it, I am penalised. How's that work then? If you want to sit on your arse in this country, we, the grafters, will make it very easy for you.Grandfondo said:
Are you LTD co?
If so just close it and start another when you get to the threshold!
Not LTD, just your humble 'sole trader' swimming up stream. Self employed for 15 years and have lost count of the amount of others who just couldn't hack it. The powers that be don't like us!If so just close it and start another when you get to the threshold!
Yes complete pain for me too, I've just registered because I'd claim back a lot of start up costs and basically to make the company progress. Starting to deal with larger contractors etc so seems the correct thing to do. However, I'm now being priced out of work and have the majority of domestic customers offering to pay cash.
Comes a point were I need to ask do I want the business or not, of course I want it but at the expense of collecting money for the vat man I risk losing the jobs which are keeping my business going in the first place !
What do I say to customers ? No sorry I don't want cash, I want the full amount including VAT....."fair dos we will go with the other guys who is 20% cheaper then"
The market is already so competitive I refuse to take a hit and lower my costs, just seems so backwards especially in construction at domestic level. You do well and rather than be rewarded your faced with another hurdle that's damaging to the business model that got you there in the first place.
Headache.
Comes a point were I need to ask do I want the business or not, of course I want it but at the expense of collecting money for the vat man I risk losing the jobs which are keeping my business going in the first place !
What do I say to customers ? No sorry I don't want cash, I want the full amount including VAT....."fair dos we will go with the other guys who is 20% cheaper then"
The market is already so competitive I refuse to take a hit and lower my costs, just seems so backwards especially in construction at domestic level. You do well and rather than be rewarded your faced with another hurdle that's damaging to the business model that got you there in the first place.
Headache.
Edited by Jamster123 on Sunday 2nd February 20:10
The only extra cost to your customers should be 20% of the profit you charged. For example of a bathroom costs you £2000+vat = £2400
Before registration you would have charged the customer £2400
After registration you will charge him £2000+vat = £2400
You will pass on to HMRC the VAT you charged to the customer (£400) but reclaim the VAT you paid (£400 ). So in this simplified example it won't cost you or the customer anything. VAT is only charged on the profit levied at each stage of a business transaction.
Before registration you would have charged the customer £2400
After registration you will charge him £2000+vat = £2400
You will pass on to HMRC the VAT you charged to the customer (£400) but reclaim the VAT you paid (£400 ). So in this simplified example it won't cost you or the customer anything. VAT is only charged on the profit levied at each stage of a business transaction.
Countdown said:
The only extra cost to your customers should be 20% of the profit you charged. For example of a bathroom costs you £2000+vat = £2400
Before registration you would have charged the customer £2400
After registration you will charge him £2000+vat = £2400
You will pass on to HMRC the VAT you charged to the customer (£400) but reclaim the VAT you paid (£400 ). So in this simplified example it won't cost you or the customer anything. VAT is only charged on the profit levied at each stage of a business transaction.
ORBefore registration you would have charged the customer £2400
After registration you will charge him £2000+vat = £2400
You will pass on to HMRC the VAT you charged to the customer (£400) but reclaim the VAT you paid (£400 ). So in this simplified example it won't cost you or the customer anything. VAT is only charged on the profit levied at each stage of a business transaction.
A weeks work at £200 per day becomes £1200 instead of £1000 - costing the punter £200.
Yeah on a typical job of mines at 2.2k only £200 of that is material with the rest lprofit So,I'm only claiming back £40 VAT? Yet if I keep my cost the same I'm collecting £400 for the vat man , unless I've got this wrong! Obviously I have vat on other overheads such as fuel I can claim back but still, what I'm collecting will outweigh what I'm claiming.
Edited by Jamster123 on Sunday 2nd February 20:34
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