VAT - voluntary registering - The Book-keepers Forum (UK)

Julie · Senior Member

VAT - voluntary registering

Fay · Senior Member

Hi Julie

Any business can voluntarily register for VAT, so if your soletrader client wants to register they can.

Fay

Julie · Senior Member

Thanks Fay.

thewallstreetkid · Member

Hi Julie

Voluntary registration is possible for anyone provided they see themselves growing and
hitting a turnover ceiling of £67,000 (2008 - 2009) in a few years.
The point is to avail the benefit of reclaiming all the vat input on purchases.

Hope this helps.

Roberto

-- Edited by thewallstreetkid at 17:16, 2008-11-11

Julie · Senior Member

Hello Roberto,

Since I originally started this thread in July, I have another client who runs a training centre. He is a sole trader and his accountant has advised him to become VAT registered - operating by `cash accounting` - He has been registered since 1 Oct.

However I doubt this decision to become registered at all. His turnover is well below the vat threshold, he keeps his overheads very low, his main purchases are on fuel due to travelling from site to site. For the month of October for example, his sales receipts total £3231.25 (inc. £481.25 vat), his purchases were £205.62 (inc £30.62 vat), this is a very average month.

Say this continued for a quarter, the total VAT due would be £1351.89 !
Seems a lot to pay as the vat reclaimable is only £91.86

Am I missing something !

Any comments would be welcomed.

Julie

thewallstreetkid · Member

Hi Julie

It all depends on the nature of the business. Clearly in this case its not viable to be registered as its got higher sales than purchases.

Its beneficial where the business is grown to an extend where it can benefit from its bulk purchases Input vat.

But the fact is any profitable business will always have to be paying the VAT man.

Regards

Roberto

Julie · Senior Member

Thanks for that Roberto,

Sadly, my client has called it a day and is currently winding down his company. Due to having one of his main training contracts pulled, current climate and generally a normally slow time of the year for training, all have contributed in him call it a day, a sad day indeed.

Julie

thewallstreetkid · Member

Dear Julie

I am sorry to hear the news.

It's just the current economic environment can't blame anyone, a sad situation.

Regards

Roberto

TraceyAnn · Veteran Member

Hi Julie,

If your client has registered for VAT, would it not be worthwhile for them to join the flat rate scheme? I'm not sure of the actual trading activity, but "other financial services" has a current rate of 9.5% which would be 8.5% in the first year of registration and can be calculated on a cash based turnover (similar to cash accounting).

TraceyAnn

TraceyAnn · Veteran Member

Hi Julie,

If your client has registered for VAT, would it not be worthwhile for them to join the flat rate scheme? I'm not sure of the actual trading activity, but "other financial services" has a current rate of 9.5% which would be 8.5% in the first year of registration and can be calculated on a cash based turnover (similar to cash accounting).

TraceyAnn

TraceyAnn · Veteran Member

Hi Julie,

If your client has registered for VAT, would it not be worthwhile for them to join the flat rate scheme? I'm not sure of the actual trading activity, but "other financial services" has a current rate of 9.5% which would be 8.5% in the first year of registration and can be calculated on a cash based turnover (similar to cash accounting).

TraceyAnn

TraceyAnn · Veteran Member

Hi Julie,

If your client has registered for VAT, would it not be worthwhile for them to join the flat rate scheme? I'm not sure of the actual trading activity, but "other financial services" has a current rate of 9.5% which would be 8.5% in the first year of registration and can be calculated on a cash based turnover (similar to cash accounting).

TraceyAnn

Julie · Senior Member

Hi TraceyAnn,

Thanks for the advice, I will take note in case I come across this again.

Unfortunately, the client I was working with which prompted me to post my query has decided to end his company, so I am just completing his accounts to date to hand over to his accountants.

Julie