3 months ago I started a private ltd company an am VAT registered, some of my customers don't want to pay VAT I don't want to lose these customers or drop my prices so that I can include the VAT in my quotes. So Ive sorted my proplem for a few more months, but I need to know am I aloud to invoice without VAT and how would I go about doing that the easy way?
Let me start by saying there are few options if are VAT registered and what to stay on the right side of the law. Firstly there is no requirement to show VAT on invoices that are less than £250 including VAT, check out http://www.hmrc.gov.uk/vat/managing/charging/vat-invoices.htm for full summary.
I would also be interested if the customers are VAT registered, as if they are there is no cost to them.
-- Edited by Taxchampion on Tuesday 21st of December 2010 11:07:44 PM
I always thought the £250 rule was for retailers only, in any case the vat is still charged.
Daryl do you need to be vat registered? Obviously if your turnover is £70k plus then yes and of course it may suit you. What do you do? Is theer a legal way of splitting the business, this can only be done if there are clearly descrete parts to the business, but if so maybe you could trade as a sole trader and not be vat registered for that. this is not to be taken lightly though and proper advice should be taken.
Is it possible that you can get your customer to buy directly any parts etc you supply and you charge for labour element, eg like many plumbers do. All depends on the nature of your business (I am assuming you are not a bookkeeper)
As Rob says, you need to seek professional advice from a tax specialist. This unfortunately isn't the right site for this advice.
Have a glance at these articles from over on Accounting Webb.
http://www.accountingweb.co.uk/item/187998
http://www.accountingweb.co.uk/item/150812
There are plenty of others over there but just look at those two for starters.
I think that HMRC will look at this that the companies have only been disaggregated for VAT purposes so the disaggregation will at best be disregarded and at worst be regarded as tax avoidance.
There is a difference between starting out as one company and then splitting and acquisition of unrelated businesses which may possibly be considered separately for VAT purposes.
One thing to consider here is that HMRC will not take this easily regardless as to whether it is technically legal. You will end up fighting with them and racking up expensive accountant and possibly legal fee's for years.... How much is splitting really worth to you?
It sounds as though either your clients are used to dealing with smaller companies for their supplies or is this a case that you are actually looking for ways to undercut your competition in order to increase your market share (a market penetration strategy) or possibly just win contracts that your clients are priced out of because they have to charge VAT?
Unfortunately the tax man is never willing to assist companies in gaining market share by giving up their cut!
Good luck with your venture but I do not think that splitting the company should be considered by yourself as an option as I think that it won't be considered as such by HMRC.
Again though, as Rob stated, seek professional advice from an accountant on this.
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks guys for the feedback, however I do need to be vat registered as i work as a stainless steel welder/fabricator in the marine industry. I would loose out to much money if I couldnt claim back the vat. I do also have an accountant who takes care of things for me but I was hopeing there might be someone on this site more suited to my line of work! Im didn't want to contact hmrc but as you guys say I think that is the best way!
I don't think anyone here suggested contacting HMRC!! In any case it seems an open and shut case, you need to be vat registered and as such you do not have a choice as to whether you charge vat or not, you either lower your charges and suffer the vat yourself, your customers pay what you charge or your customers go elsewhere.
Thanks guys for the feedback, however I do need to be vat registered as i work as a stainless steel welder/fabricator in the marine industry. I would loose out to much money if I couldnt claim back the vat. I do also have an accountant who takes care of things for me but I was hopeing there might be someone on this site more suited to my line of work! Im didn't want to contact hmrc but as you guys say I think that is the best way!
Regards Daryl
In which case, surely most of your customers are vat registered and therefore this has no affect on them?
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