VAT help!!

spanner-06

me and my boyfriend have been comfortably selling the odd bits on ebay whilst both keeping seperate accounts.we have decided that to make life easier,we will put all the work we do together and run it as one business.does this mean now that if our turnover is over the VAT amount we will have to be VAT registered even though we are 2 people and if so, can someone please shed a little light on what this entails?we buy second hand so don't know how this would fit in with getting a vat receipt,etc.any information would be greatfully received

LinasPilibaitisisbatman

I'd be very surprised if you exceed the VAT threshold even combined

spanner-06

probably not for the first year but perhaps for the second.we have a lot of expensies but we do well.we are saving for a house so its 24 7 at the moment and we wanted to know just in case.we can take 1000 to 1500 a week and thats each so it could be close.

TM1976

If you put the business together as a single trading entity you won''t be able to split the VAT threshold.

I don't think it has an effect on the threshold but if you sell second hand there in a margin scheme that you can use whereby you only charge VAT on your profit. This may be more suitable for your business

spanner-06

Thats fair enough. When we both first started out, we did usual 9-5 hours.... if that!! and went at a leisurely pace.now we really want some property. So we have been working as much as we can, as hard as we can!!we barely take a break as we are so commited. We are doing quite well now and were curious about VAT in case it got to that point.Even if we clubbed together and met the threshold., the profit would probably be 20,000 to 30,000 at the most because of the amount of expenses we have. So between the 2 of us,its a normal basic wage for all the efforts we put in. But i think your right,we do need proffessional advice if it gets to that. We just thought we would see what advice we could get from here for now.

Thanks for everyones help so far :T

spanner-06

Ok I am back struggling with the VAT questions. I have been doing very well on ebay selling second hand goods. I am worried , although I am not near the VAT threshold (although not a million miles away), I might get closer, like say next year. As the items are second hand, VAT will have already been paid on them once. I understand I would have to pay it on profits only. I am still stuck on the whole paperwork area. What do I have to do extra? I know new stock would have to have vat added to it before it gets put out for sale but do I need to do this? Thanks in advance

JasonLVC

If you are selling 2nd hand goods, then you could operate under the 2nd hand goods margin scheme.

Do a google for it to find out more but basically, you only charge VAT on the 'margin' between what you bought the goods for and what you sold them for. The 'margin' counts towards your taxable turnover and so you'd have to sell an awful lot of 2nd hand goods to get anywhere near the £68k VAT threshold for registration.

As to your previous question, the 'entity' is VAT registered not the business. If you/partner are trading then you are probably a partnership or two sole traders. If partnership turnover for VAT is £68k per 12 months. If sole trader, arguably both of you could clock up £68k sales each before needing to register for VAT but it can be tricky if you are basically selling the same stuff as HMRC will see one business, not two and treat you as such for VAT purposes.

Rolo_Tomasi

spanner-06 wrote: »

I am still stuck on the whole paperwork area. What do I have to do extra?

What paperwork are you keeping at the moment? If you register for VAT the paperwork isn't that much more complicated than a non VAT registered trader. If you are keeping a spreadsheet its just a couple of extra columns.

spanner-06

Thank you for you answer!! Very helpful.

Rolo_Tomasi

If you let us know how you are keeping your records at the moment then we can offer suggestions as to how this has to be changed once you register for VAT.

duncan303

seems to me that you are worrying a bit..........

I have been personally VAT registered for well over 20 years now. There are a lot of technicalities and I can only guess at those that might apply to your particular business.

What I can say is that my inspections have all gone very well and I have found them to be, although very matter of fact, helpfull and incidentally to my advantage. There is a considerable amount of information available on the HMRC site but finding it may be difficult. I would give them a ring and ask if they could direct you to the documents that might be helpfull to you.

Dial 141 before you speak and stay anonymous if you prefer, state that it is a "general enquiry". I have found them to always be very helpfull on the phone.

Glad to hear that you are doing well, and my advice is to try never to be defensive or agressive with them. One has the choice to conduct business on the black market or within the system. If you can afford to lose everything then maybe stay in the blackmarket, but you sound to me that it is worrying you so you really you have no choice.

You do have the choice to walk around with wads of cash that you can only spend on frivolous disposables, or step up to the plate and obtain the advantages and respect that comes with being personally VAT registered.

When the sums start getting big, forget heresay there are only two people you will have to account to, the VAT Inspector and your Inspector of Taxes. Accountants can only provide educated guesses and they charge you for the privilege.

"I have a letter from an accountant" will not keep you out of prison "I have a letter from an Inspector of Taxes" will


good luck.