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Adrian Pitt

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VAT

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That is the question!

I'm in the process of taking on board an accountant and thought I'd get some wise words from "those that know" so it looks like I'm switched on when I sit opposite him/her!

I wondered if I could grab your thoughts on whether it's an advantage to register for VAT or not in the training game? I know there are thresholds, which I don't imagine meeting just yet (!!) however, I HAVE been buying equipment - photocopier combo, projector, laptop case etc - intended solely for business purposes and zooming around in my car saving all my petrol VAT receipts.

Is charging customers VAT for services an advantage/disadvantage? I know some of the companies my colleague and I would commission at the company I last worked for charged VAT and some didn't, we wouldn't let it put us off commissioning.

Looking forward to reading your thoughts.

Thanks again,

Ade.

10 Responses

  1. VAT

    My advice is not to!

    Unless you have a lot of expenditure for reclaiming the VAT back.  Keeping the books, doing the returns, getting the visit from the inspector = not worth the effort, imo.  Plus they have a direct link with HMG income tax department, as I understand it …  so everything should tally.  Only register when you have to.

    Best of luck with your new venture!

    Ian

  2. VAT
    Hi Ade
    This is a difficult one as there are pros and cons either side.

    I registered about a year ago and overall I am probably £700-£800 better off a year but it is a lot more admin. Recording wasn’t so much of a problem as I just added another column to highlight the VAT but the quarterly VAT returns are a bit of a pain. I believe the revenue do free courses to help although I learnt it myself and mastered it (although I’ve not had a VAT inspection yet!!). My accountant was good enough to cast his eye over my first return just to make sure there were no glaring errors.

    Would I do again if Icould make the decision again. Probably I would…..
    Happy Days!
    Bryan
    http://www.abctrainingsolutions.biz – course delivery and loads of course materials

  3. Thanks Ian

    Cheers for the note of caution, I’ve read so many things saying I don’t HAVE to register, however, there could be some advantages to. I’ll be interested to see what the accountant says at my first meeting on Monday!

    Best wishes,

    Ade.

  4. Cheers Bryan

    Thanks for the advice, I’m hoping one day I’ll master the figures, too! Maths was never my strongest subject and reading up about Tax, VAT, NI is not the most riveting of things. Just waiting for dates for Day 2 and 3 of my Business Link course, where I know they cover such topics, be interesting to see what advice I get from them and the new accountant when I meet him on Monday – armed with a list of questions!

    Best wishes,

    Ade.

  5. Go for it

    Registering for VAT was the first thing I did in 1992 when I went freelance.

    This meant that I was taken more seriously by the clients I was looking to work with, and who themselves were registered, so it was no net cost to them, and I was able to reclaim retrospectively for the very items you specified in the original post.

    As for admin time…an hour every quarter if you have your invoicing and expenses up to date.

  6. Thanks Andrew

    Really good to hear both sides of the debate, it means I can make a well-informed decision. I’ll see what the accountant says on Monday – my first visit – and take things from there based on his expertise and the insight from you guys.

    Enjoy the weekend.

    Ade.

  7. To VAT or not to VAT?

    Hi Ade,

    Assuming that you do not achieve a turnover of over £64K, this question is rather mute, as it becomes compulsory.

    When I started out in 2001, I quickly became VAT registered, as my clients demanded it from me, before employing my services.

    One of the advantages of being VAT registered, is that it makes your company more professional and successful to potential clients.

    The down side? spending a couple of hours a quarter doing the VAT return, well in my case my IT system actually calculates the amount, and I have to say, it takes me longer to write the cheque, than filling in the actual form!!

    Hope this helps

    Regards

    Julia Emelogu

    Maximum Impact Solutions

    http://www.maximumimpactsolutions.co.uk

  8. Thanks Julia

    Great advice, thank you. I visited my accountant for the first time yesterday and he said exactly the same thing. If I’m dealing with companies that are VAT registered, it was wise for me to go down that route, too. He’s advised me to hold fire for now, just until a number of transactions have come in and out and then he’ll review if it’s wise to register. It looks like I will do. I’m getting there. Week four of self employment now. Huge learning curve when it comes to TAX, NI and VAT!

    Ade

  9. VAT

    Hi Ade

    I have been VAT registered now for a few years but I have gone on to the flat rate scheme.  This means although I charge 17.5% I only pay 10.5% to the HMRC.  The difference is seen as income and you are taxed on it.  I fill out a quarterly return bit it is really basic.  As mentioned below when you start to earn over the £64k it is compulsory but this is based on a rolling year and not April to April.

    May be worth asking your accountant about the flat rate scheme.

    Sue

  10. Thanks Sue

    Cheers for the tip, Sue. I’ll mention the flat rate scheme when I see him next. Due a second meeting in a few weeks time.

    Thanks for your help.

    Ade.

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