Avoiding VAT and Employment Issues!
Discussion
I am working on a business plan for a new community facility and am pondering a little issue.
The intention is to have a mixture of community (local charities voluntary organisations etc) and business (local authority, health authority, business etc) hiring. It will be used for short term hire for meetings, exhibitions, plays etc.
Of course community hirers want it as cheapas possible, will be prepared to put out their own chairs and tables etc, and usually aren't registered for VAT.
Business hirers will want chairs. tables etc put out for them, and are registered for VAT.
Bearing in mind its the community raising the money I want to try and avoid generating an income which will force VAT Registration.
I was wondering if I could identify some self employed caretakers to out chairs tables etc out for business users. I would then use an online booking system and users would book and pay for the hall, those who wanted tables out out etc would then click on a link and choose one of the caretakers who would lay out the tables etc and arrange to pay them seperately. The caretakers would be able to choose their own rates, and hours of work.
So would it be considered the caretakers are my employers and would their income count as mine for VAT registration purposes?
The intention is to have a mixture of community (local charities voluntary organisations etc) and business (local authority, health authority, business etc) hiring. It will be used for short term hire for meetings, exhibitions, plays etc.
Of course community hirers want it as cheapas possible, will be prepared to put out their own chairs and tables etc, and usually aren't registered for VAT.
Business hirers will want chairs. tables etc put out for them, and are registered for VAT.
Bearing in mind its the community raising the money I want to try and avoid generating an income which will force VAT Registration.
I was wondering if I could identify some self employed caretakers to out chairs tables etc out for business users. I would then use an online booking system and users would book and pay for the hall, those who wanted tables out out etc would then click on a link and choose one of the caretakers who would lay out the tables etc and arrange to pay them seperately. The caretakers would be able to choose their own rates, and hours of work.
So would it be considered the caretakers are my employers and would their income count as mine for VAT registration purposes?
You only have to register for VAT if your turnover reaches a certain threshold. Eric will no doubt know the exact figure, but I am pretty sure it is over £60k a year.
That is a completely separate issue to whether you have employees or not. If you have employees, you will need to register and ensure that you are making the correct tax and NI deductions from their payments.
If your clients are going to be solely VAT registered businesses, whether you register or not is so not so much of an issue, as they can claim back the VAT. The benefit would be that you could claim back VAT on anything you buy for the business either for capital purchases, for example chairs and tables, and running costs.
That is a completely separate issue to whether you have employees or not. If you have employees, you will need to register and ensure that you are making the correct tax and NI deductions from their payments.
If your clients are going to be solely VAT registered businesses, whether you register or not is so not so much of an issue, as they can claim back the VAT. The benefit would be that you could claim back VAT on anything you buy for the business either for capital purchases, for example chairs and tables, and running costs.
I don't want to have to register for VAT although in a way it would be easier, as I could then claim back all the VAT on the original construction costs fees etc as well as all the other annual input costs.
My thoughts are that if I can remove the caretaking element from my turnover there is no danger of having to register for VAT as my income won't be sufficent. However if the caretaking element is my income then I might go over the VAT limit.
The problem being that as a community hall most users and most competitors are not VAT registered. Therefore having to charge VAT puts one at a disadvantage. Business lettings will hopefully be a significant source of income but really are a bonus, rather than the reason d'etre for the facility. The facility is need by the community and they are paying for it. They don't want to pay for it lots of times over!
My thoughts are that if I can remove the caretaking element from my turnover there is no danger of having to register for VAT as my income won't be sufficent. However if the caretaking element is my income then I might go over the VAT limit.
The problem being that as a community hall most users and most competitors are not VAT registered. Therefore having to charge VAT puts one at a disadvantage. Business lettings will hopefully be a significant source of income but really are a bonus, rather than the reason d'etre for the facility. The facility is need by the community and they are paying for it. They don't want to pay for it lots of times over!
Thw wishes of your customers have no bearing on your obligation to register for VAT.
On what grounds would you consider the caretakers you plan to use to be sole-traders (I hate the term self-employed as it is, in effect, meaningless. Sole trading is a much more accurate description of "non-employee" status).
On what grounds would you consider the caretakers you plan to use to be sole-traders (I hate the term self-employed as it is, in effect, meaningless. Sole trading is a much more accurate description of "non-employee" status).
My thoughts were that it would be up to the caretakers to decide when to work, and who for, and how much they were paid. My interest would be to ensure that they were honest, and could be trusted with keys to the facility. I would not be taking any element of the money they made. My booking website would go to a page offering hirers a selection of caretakers to book or none at all.
So therefore I would be exercising no control of them, and they could offer their services to any hall in the area although in practice most halls use volunteers, although of course if it worked they might follow my example.
I could see an issue would be if they choose solely to work for clients at my hall.
While whilst I say its my hall it will belong to the charity I chair!
So therefore I would be exercising no control of them, and they could offer their services to any hall in the area although in practice most halls use volunteers, although of course if it worked they might follow my example.
I could see an issue would be if they choose solely to work for clients at my hall.
While whilst I say its my hall it will belong to the charity I chair!
I can't see how they would be classed as "your" employees, you are simply recommending the services of a third party for a service you do not include in the your hire charge. All further contracts and agreements are between the two other parties. The closest comparison I can think of is that I had some carpets fitted recently to a rental flat I had, CarpetRight arranged the fitters booking place and time etc, but I paid the fitters directly at the end of the fit. The contractors are not working solely for you just because it's your hall, they are working for a variety of clients following leads given by you.
Then again, I'm not the revenue and their decisions don't always make sense
Then again, I'm not the revenue and their decisions don't always make sense
Chrisgr31 said:
My thoughts were that it would be up to the caretakers to decide when to work, and who for, and how much they were paid. My interest would be to ensure that they were honest, and could be trusted with keys to the facility. I would not be taking any element of the money they made. My booking website would go to a page offering hirers a selection of caretakers to book or none at all.
So therefore I would be exercising no control of them, and they could offer their services to any hall in the area although in practice most halls use volunteers, although of course if it worked they might follow my example.
I could see an issue would be if they choose solely to work for clients at my hall.
While whilst I say its my hall it will belong to the charity I chair!
That would work as long as it could be shown you had no connection to them. I wouldnt even advertise their price or allow them to be booked through your site. As long as all you are doing is providing a set of links though, then there is no harm in that!So therefore I would be exercising no control of them, and they could offer their services to any hall in the area although in practice most halls use volunteers, although of course if it worked they might follow my example.
I could see an issue would be if they choose solely to work for clients at my hall.
While whilst I say its my hall it will belong to the charity I chair!
Thank you for the information.
So in essence if I approach Joe Bloggs and ask him to set to set up a caretakering service and I am his sole customer etc his income is going to be treated as mine.
If on the other hand John Smith has a caretaking business, and offers the same service at different halls etc I should be ok
So in essence if I approach Joe Bloggs and ask him to set to set up a caretakering service and I am his sole customer etc his income is going to be treated as mine.
If on the other hand John Smith has a caretaking business, and offers the same service at different halls etc I should be ok
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