I wonder if anyone can give me some advice, my husband is thinking of being a HGV self employed driver working for agencies. He is expecting his turnover to be about £35k a year. Although under the VAT threshold his mates who do this suggests that he becomes VAT registered can you please advise?
Also would you advise a sole trader or ltd company?
100% register for VAT but under the Flat Rate Scheme which I think is 10% for freight related with a 1% discount in year 1. On £35k he will add £7k vat to his sales invoices but will only pay around £4,200 back making nearly £3k in 'free' money. I would go limited and get all the usual tax benefits. IR35 could raise its ugly head but get a decent contract drawn up.
So your saying that if they register for flat rate scheme, they will basically charge 20% vat on sales (in this example £7k, and 10% flat rate scheme will be paid over to HMRC, £4200) and they basically keep the balance £3k..
If they are on flat rate VAT scheme they don't reclaim on revenue items, only capital expenditure over a certain value (can't remember right now what the value is!)
Stuart, the advantage of this is really only for agency type workers, ie they do not supply their own vehicle and fuel, so your couriers may not benefit from FRS.
