Simple self employed VAT/Tax question
Discussion
If I was self employed and running my own business (not LTD) and I was offered some goods for cash is it worth declaring them? I will be selling them on at a later date.
The vendor is non VAT reg, so is there much point? I can't claim back the VAT, but is there anything else an accountant can claim back, personal tax or whatever?
The vendor is non VAT reg, so is there much point? I can't claim back the VAT, but is there anything else an accountant can claim back, personal tax or whatever?
227bhp said:
If I was self employed and running my own business (not LTD) and I was offered some goods for cash is it worth declaring them? I will be selling them on at a later date.
The vendor is non VAT reg, so is there much point? I can't claim back the VAT, but is there anything else an accountant can claim back, personal tax or whatever?
If the goods are kosher, you'll get an invoice, if they're not (for whatever reason) you won't. The vendor is non VAT reg, so is there much point? I can't claim back the VAT, but is there anything else an accountant can claim back, personal tax or whatever?
You are accountable for what you sell, and so is your supplier to you.
That's all there is to it.
227bhp said:
If I was self employed and running my own business (not LTD) and I was offered some goods for cash is it worth declaring them? I will be selling them on at a later date.
The vendor is non VAT reg, so is there much point? I can't claim back the VAT, but is there anything else an accountant can claim back, personal tax or whatever?
What is the name of your company?The vendor is non VAT reg, so is there much point? I can't claim back the VAT, but is there anything else an accountant can claim back, personal tax or whatever?
Arthur Daley videos
How you pay for goods is a matter of convenience, bacs, cash, cheque, gold dust etc.
The VAT situation is a matter of fact, registered - charge it, not registered - don't charge it.
The wording of your original question said cash, which implies black economy, but you seem to be trading.
You need to decide whether you're going to live within the law or not.
HMRC are your silent partner and the consequences of cutting them out is your decision.
We can't help.
(This sounds so pompous, but it's still true)
The VAT situation is a matter of fact, registered - charge it, not registered - don't charge it.
The wording of your original question said cash, which implies black economy, but you seem to be trading.
You need to decide whether you're going to live within the law or not.
HMRC are your silent partner and the consequences of cutting them out is your decision.
We can't help.
(This sounds so pompous, but it's still true)
You can only offset cost of sales if you put the purchase in the books and have an invoice for it. And then when you sell it you may be liable to pay tax on the profit. Of course you can still buy something with cash and have an invoice, but 'cash' also means under the pub table.
It's up to you whether you want to be Arthur Daley or legitimate but switching halfway doesn't make sense to me. HMRC can look at your sales and ask 'So where did you buy this from?'
It's up to you whether you want to be Arthur Daley or legitimate but switching halfway doesn't make sense to me. HMRC can look at your sales and ask 'So where did you buy this from?'
tight fart said:
If you're self employed and vat registered and your business is say, selling bricks.
If you buy some for cash without vat my understanding is you would put that in your books, without vat.
When you sell them you still charge vat, and pay the taxman.
Yes this is correct and what I do sometimes (not selling bricks, but a good example), but what I am asking is there any point (of financial gain) in submitting a purchase invoice when there was no VAT involved? If you buy some for cash without vat my understanding is you would put that in your books, without vat.
When you sell them you still charge vat, and pay the taxman.
There are instances in some legitimate businesses where we have to buy from a non VAT reg source and then sell on whilst giving HMRC their slice.
There are a lot of pompous d1ckheads here who don't actually read the question, understand it nor have a qualified answer, yet they just have to post up something to fill their time.
Edited by 227bhp on Friday 1st September 14:01
tight fart said:
Yes because it changes your profit at the end of the year.
If you sell something for £120 inc vat you don't appear to have paid for, you've made and get taxed on the £100.
If you pay £50 for it (no vat) sell for £100 plus vat, £20 to vat man and tax on the £50 profit end of year.
That's the basis I've always worked on.If you sell something for £120 inc vat you don't appear to have paid for, you've made and get taxed on the £100.
If you pay £50 for it (no vat) sell for £100 plus vat, £20 to vat man and tax on the £50 profit end of year.
tight fart said:
Yes because it changes your profit at the end of the year.
If you sell something for £120 inc vat you don't appear to have paid for, you've made and get taxed on the £100.
If you pay £50 for it (no vat) sell for £100 plus vat, £20 to vat man and tax on the £50 profit end of year.
Yes this is what I'm getting at, could you put a final figure on the bold parts? Say the difference between the two scenarios. If you sell something for £120 inc vat you don't appear to have paid for, you've made and get taxed on the £100.
If you pay £50 for it (no vat) sell for £100 plus vat, £20 to vat man and tax on the £50 profit end of year.
I'm not trying to evade anything, just interested in how it breaks down into figures.
227bhp said:
Yes this is what I'm getting at, could you put a final figure on the bold parts? Say the difference between the two scenarios.
I'm not trying to evade anything, just interested in how it breaks down into figures.
Needs two pieces of information to do that for you:I'm not trying to evade anything, just interested in how it breaks down into figures.
1. How much might you pay for the stock in cash?
2. How much do you intend selling them for (either including or excluding VAT, just tell us which)?
If you want to do it yourself, then the simplest way to look at it is:
Cost of Goods x Top Rate of Tax you pay = Income Tax you save.
So if the Goods cost £1000 ..... and you pay 40% tax ...
by putting the Goods through the business as a cost, then you will save £1000 x 40% in tax, ie £400.
If you don't pay 40% tax, then you would save £1000 x 20% in tax, ie £200.
Edited by sgrimshaw on Friday 1st September 17:41
227bhp said:
If I was self employed and running my own business (not LTD) and I was offered some goods for cash is it worth declaring them? I will be selling them on at a later date.
The vendor is non VAT reg, so is there much point? I can't claim back the VAT, but is there anything else an accountant can claim back, personal tax or whatever?
Whatt quantity of goods, and would you retail them?The vendor is non VAT reg, so is there much point? I can't claim back the VAT, but is there anything else an accountant can claim back, personal tax or whatever?
SantaBarbara said:
227bhp said:
If I was self employed and running my own business (not LTD) and I was offered some goods for cash is it worth declaring them? I will be selling them on at a later date.
The vendor is non VAT reg, so is there much point? I can't claim back the VAT, but is there anything else an accountant can claim back, personal tax or whatever?
Whatt quantity of goods, and would you retail them?The vendor is non VAT reg, so is there much point? I can't claim back the VAT, but is there anything else an accountant can claim back, personal tax or whatever?
The fact is that by treating the purchase as a cost he will reduce his taxable profit and therefore reduce his tax liability.
Edited by sgrimshaw on Friday 1st September 17:47
sgrimshaw said:
Needs two pieces of information to do that for you:
1. How much might you pay for the stock in cash?
2. How much do you intend selling them for (either including or excluding VAT, just tell us which)?
If you want to do it yourself, then the simplest way to look at it is:
Cost of Goods x Top Rate of Tax you pay = Income Tax you save.
So if the Goods cost £1000 ..... and you pay 40% tax ...
by putting the Goods through the business as a cost, then you will save £1000 x 40% in tax, ie £400.
If you don't pay 40% tax, then you would save £1000 x 20% in tax, ie £200.
That will do for me, thanks for taking the time. 1. How much might you pay for the stock in cash?
2. How much do you intend selling them for (either including or excluding VAT, just tell us which)?
If you want to do it yourself, then the simplest way to look at it is:
Cost of Goods x Top Rate of Tax you pay = Income Tax you save.
So if the Goods cost £1000 ..... and you pay 40% tax ...
by putting the Goods through the business as a cost, then you will save £1000 x 40% in tax, ie £400.
If you don't pay 40% tax, then you would save £1000 x 20% in tax, ie £200.
Edited by sgrimshaw on Friday 1st September 17:41
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