VAT - How to make it pay for small businesses

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VAT registration - how to make it pay for you.
If your turnover exceeds the prevailing VAT registration limit you have to register with HMRC.
However it may be in your interest to register on a voluntary basis.
If you sell to other businesses that are themselves VAT registered,
by becoming registered you will charge them VAT on your supply of goods and services
Which most likely they will be able to recover.
If you do this you will then you would be better off
as you would then be able to recover any input VAT that you incur on many of your purchases
In such circumstances you could be uncompetitive if you don't register.
Imagine that your purchases cost £100 plus VAT at 20%. You thus pay out £120.
Say you want to make a profit on the sale of £100, then you have to sell at a price of £220.
If you are VAT registered you still pay out £120 but you can recover the input tax and thus the cost to you is only £100.
To make the same £100 profit you must sell at a price of £200, but if you are VAT registered you
Have to charge £40 VAT
If you sell to a VAT registered business they will recover the VAT also and thus the net cost of your goods to them is £200. This is cheaper than the price of £210 if you are not registered.
Your VAT registered customers would thus prefer you to be registered also.
Where you sell to the general public your VAT registration will make you more expensive as they would be unable to recover the VAT that you charge them
They would face a cost of £240 instead of £220.
It is also relevant to mention that by not being registered your customers will know that your business is small. Your may need to register for image purposes.
Another way you can make money on being VAT registered is to take advantage of the Flat Rate Scheme should this work to your advantage.
Whilst you still charge VAT on all your sales at the prevailing VAT rate,
in calculating the amount that you pay you simply apply the appropriate Flat Rate percentage
for your business to your gross turnover.
You can ascertain the appropriate rates for your business by simply doing a Google search
For Flat Rate Scheme and follow the link to the HMRC website.
Whether or not the Flat Rate scheme will work for you will depend upon the profit margins that you work with in your business and the rate that applies to your business.
Some businesses will benefit from the scheme -- others will not.
You will need to do the calculations on both the Flat Rate scheme and the conventional basis to see which one works best for you.
If you want to discuss your options with regard to VAT, please contact us at DEB
Telephone [phone] or
Email [e-mail]
Watch out for our video about the problems of the VAT trap as this may help you make
The best decision for you business..
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[@sarahslayjones]

Nice and easy to understand, thank you for your time and effort to make this video for us clueless folk out here

[@gretchin3000]

Brilliant video. I really like the way you show the example so clearly. Good job.

[@debaccountants]

Alice Grieb-Young Just noticed your comment. Thank very much. It is nice to know what you have done is appreciated. Hope it helped you. - David

[@tstefant]

Excellent I was looking for this info for a long time.

[@SteveHasACamera]

Thanks for explaining this. You made it sound much clearer then everyone I've asked. I do video production, so sometime I deal with individuals, so how would you suggest I tackle this? ...I fear VAT might put them off, due to them not being VAT reg'd.

[@comsecdiving]

Excellent videos. In real layman's terms

[@ShantellBancroft]

Thank you extremely helpful 👍

[@RicardoCerveraBlanco]

Brilliant video, thanks. How can i sell goods with VAT as self emploied with UTR?.

[@debaccountants]

Hi Ricardo. Whether you wish to voluntarily register for VAT depends upon whether your customers are VAT registered or not. This is the case whether you operate as a self employed individual or as a limited company. If in doubt - do not register - you need to discuss this with your accountant before making a decision.

[@BKutube]

What about takeaways, how can it work for them ?

[@debaccountants]

Takeaways are on a lose lose situation relating to VAT - they should avoid registration as long as they can until they exceed the VAT limit, currently at £85,000. Thereafter the VAT is not nice - suggest you watch my video about the VAT trap for some insight into the position that they are in.

[@furnish1696]

could as a citizen I register my self as a company, VAT register and then get money back

[@MikeLee-tv3pz]

No, it needs to be a business. Furthermore, the expenses put through a business (Ie, what you would do to claim it back) need to be proveable as for the business and only the business. Source: Just graduated accountancy Degree.

[@jonasnoer381]

i like chease. and my feed is big.