Meeting New Client - The Book-keepers Forum (UK)

Blacker9999 · Veteran Member

Meeting New Client

RobH · Expert

Hi Ronnie,

Never done a restaurant before however I can't think of anything that would be unusual. I guess most payments will be made by card so takings will be clear there. There will be some cash involved so would like to see a properly kept takings record. the raw ingredients that are purchased will be zero rated for vat but once cooked they will become ataxable supply. I think it should be relatively straightforward but hopefully someone here will have practical experience. Good luck mate,

Rob

ADAS · Guru

Hi Ronnie,

The first thing I'd discuss with the restaurant is their cash controls and record keeping. It may well vary from region to region, but where I live, my experience of restaurants is an awful lot of their transactions are in cash - in and out.

As Rob pointed out, the vast majority of a restaurants costs are either zero rated or outside the scope e.g. staff costs and potentially rent. There "may" well be a temptation there. So I'd want to be comfortable with what they're doing.

hth

-- Edited by ADAS on Thursday 30th of September 2010 04:51:56 PM

Marky65 · Guru

Hi Ronnie

Restaurants are no different to any other business really. As has been said previously you just have to make sure the controls are there, especially if a significant amount of their takings are in cash as this would be easiest area to avoid VAT being payable. These days most restaurants are paid by debit/credit card so that is easy to control.

Good luck and come back if you have any further queries after meeting the client

Regards

Mark

Blacker9999 · Veteran Member

Folks,

Met the client yesterday and agreed to work for him.

Background, took over the busines from liquidation off previous owner in March 10.
The VAT man as generous as they are agreed to charge him 10K as a down payment, he needs to compile his vat returns each month from JULY.

I ageed to compile his books from March 2010 hopefully this will generate the vat reurns for july aug and sept once i input the information.

He deals solely in cash at the minute?

One question, as this is a restaurant is it as simple as entering the purchase invoices including vat., and then the cash daily sales calculating the vat, this should then produce the vat return.

Am i right in my thinking?

Cheers Ronnie

Julie · Senior Member

Hi,

Pay particular attention to purchase invoices as not all food is vatable !

On the sales front, depending upon what system of analysis you are using (I use simple spreadsheets for this type of business), have a running total of cash in on a weekly basis and at the end of the quarter or month, calculate the vat element and take this away from the purchase vat = vat payable to HMRC

Good luck and well done on gaining a new client.

Julie

ADAS · Guru

Blacker9999 wrote:

Background, took over the busines from liquidation off previous owner in March 10.
The VAT man as generous as they are agreed to charge him 10K as a down payment, he needs to compile his vat returns each month from JULY.

That sounds odd to me Ronnie unless the new owner was also a part-owner of the previous business that went into liquidation.

Blacker9999 · Veteran Member

Julie,
From conversation with the new owner it seems that everything at the minute is cash sale and pays invoices etc from this.
I gathered that his takings will be of a daily nature, however he has not gat a till that will determine what he has sold, just a daily takings figure.
So i am assuming if he can't determine what he has sold and if i'm correct that all food sold to be consumed on the premises is vatable and that only cold food sold as a take away is not vatable then i beleive i should merely just work out the vat on his sales minus vat on purchase invoices = vat payable.

Is this correct, would it be benifical for him to invest in a itemised till.

Cheers Ronnie

Blacker9999 · Veteran Member

ADAS,

Yes it sounds strange to me too, however he was an employee of the previous owner, so maybe the authorties have taken this for their reasoning?
Ronnie

ADAS · Guru

I appreciate that HMRC has the right to request the deposit when a company is bought out of administration. But I thought it only applied if the director of the new-co has a history of vat non-compliance. A client of mine was asked for a bond, refused to pay and HMRC backed down.

Do you know you can appeal against the decision and request an independent review. Perhaps it's worth considering.

Blacker9999 · Veteran Member

ASDA,
Yes your obsolutely right, i have suggested to him that we compile his vat returns for July, Aug and September then appeal the decision and try to get his 10k back or even reduced to 5K, will keep site informed for reference
Cheers
Ronnie

RobH · Expert

Ronnie, it may be worth looking to see if the client would benefit from the flat rate scheme, currently 11% going up to 12.5% on 4th Jan. Would make life very simple for you and possibly worthwhile for the client depending on how many inputs there are.

Rob

Blacker9999 · Veteran Member

RobH,
This could certainly be an option, as on that scheme you can't claim back VAT, i just received the invoices todays and from what i can see most of the purchases are zero rated.
I am going to compile his vat for the period i mentioned earlier then do a comparsion for the FRS.
Is it possible to join this scheme at anytime?

Ronnie

RobH · Expert

Yes theres a form you can download, but I've just checked the turnover limit and its only £150k

Rob