Do I quote the VAT cost if i'm not VAT registered ?

Scottishbod

My business income is below the VAT threshold, I send invoices in this form,

Cost £
VAT £
Delivery £

Should I not separate the VAT if i'm not registered ?

chalkie99

Scottishbod wrote: »

My business income is below the VAT threshold, I send invoices in this form,

Cost £
VAT £
Delivery £

Should I not separate the VAT if i'm not registered ?

You should not mention VAT at all as you are not registered.

Simply invoice the cost and delivery.

If you invoice as shown in your post then your customers will be led to believe you are charging VAT (which you are not entitled to) and they will wrongly believe they can claim the VAT back if they are registered themselves. That will certainly cause you problems with both your customers and HMRC.

So, work out your prices allowing for the VAT you will have paid to your suppliers.Add on your profit margins and delivery costs and do not mention VAT anywhere.

chalkie99

By the way, you mention your business income.

You do realise that the VAT threshold is based on your turnover (your total sales) and not on profits?

Scottishbod

chalkie99 wrote: »

You should not mention VAT at all as you are not registered.

Simply invoice the cost and delivery.

If you invoice as shown in your post then your customers will be led to believe you are charging VAT (which you are not entitled to) and they will wrongly believe they can claim the VAT back if they are registered themselves. That will certainly cause you problems with both your customers and HMRC.

So, work out your prices allowing for the VAT you will have paid to your suppliers.Add on your profit margins and delivery costs and do not mention VAT anywhere.

Ah, ok thanks for the info.

chalkie99 wrote: »

By the way, you mention your business income.

You do realise that the VAT threshold is based on your turnover (your total sales) and not on profits?

I know. Unfortunately I doubt i'll be anywhere near the threshold for a while yet, but i'll keep an eye on the books.

JasonLVC

If you've already raised invoices showing the VAT seperate, collected it from the customer and you're not VAT registered, then this is fraud and a criminal offence.

Chalkie's advice is good advice, they just forgot to mention the criminality aspect of what you've done, which I accept was in genuine error.

Ensure you do not charge VAT again on your invoices in future and if you've issued a lot of invoices with VAT on in the past, suggest you might consider re-invoicing your clients and repaying them the VAT you took from them in error.

Scottishbod

So far i've only sent a couple of quotes, but i'm working on the invoice template.
I'll let them know about the error.

jexygirl

if you arent registered to pay VAT (as in not turning over what is considered to be enough to pay / claim VAT around 80k a year), you cant charge VAT. You cant charge for something, and reclaim something, that you arent registered to pay or reclaim- that is common sense, or as Jason says fraud, an accountant would have told you that.
You can register for VAT below turnover threshold, but its rarely, if ever, beneficial to you as a buisness owner to do so. Basic buisness course or half hour with accountant looking at your buisness plan would give you that info...
jex

chalkie99

The threshold is now £73k.

You can register for VAT below turnover threshold, but its rarely, if ever, beneficial to you as a buisness owner to do so.

That isn't necessarily so. If you are supplying other businesses who are themselves VAT registered then registration will certainly help you to be more competitive as you can base your own costs on the nett prices.

harz99

chalkie99 wrote: »

The threshold is now £73k.



That isn't necessarily so. If you are supplying other businesses who are themselves VAT registered then registration will certainly help you to be more competitive as you can base your own costs on the nett prices.

Also certain businesses are zero rated for vat, being vat registered in those circumstances allows you to reclaim any you pay out to YOUR suppliers (although you will have to do the vat returns of course).

Premier_2

Scottishbod wrote: »

My business income is below the VAT threshold, I send invoices in this form,

Cost £
VAT £
Delivery £

Should I not separate the VAT if i'm not registered ?

I suggest you take legal professional advice.

If you were VAT registered, the cost of your delivery service would also be liable to VAT.

As you are not VAT registered, to attempt to collect VAT on your invoiced amount (or any part thereof) is illegal.
What have you been doing with all the VAT payments you have collected??? :huh:

JasonLVC

Scottishbod wrote: »

So far i've only sent a couple of quotes, but i'm working on the invoice template.
I'll let them know about the error.

Fair enough.....good job you posted on the forums before you dropped yourself in it.:money: