Business Start up NOT VAT REGISTERED - Quoting

lukcra

Hi there,

Firstly thanks for taking time to read this.

This may come across as a stupid question but I've always been told there is no such thing.

I am currently in the process of tendering for a contract (cleaning). We are not vat registered, but will be dealing with VAT registered companies, B2B it will never be B2C.

There is no real need to be vat registered at the moment.

Now my problem is, to be competitive with my competitors, who are VAT registereed, Does it make sense to discount my tender by the equivalent of VAT. As the company i'll be working for will not be able to cloaim this back, but they would be able to if they decide to go with a company that is VAT registered.

Doers this make sense? aand is it common practice to take vat off the quote if not vat registered and dealing with a VAT registered customer?

Any thoughts would be appreciated.

Regards


Craig

GlynD

You shouldn't have to discount because the companies you are tendering to will be looking at the nett tender from the other applicants. The only thing that is missing from your tender is the VAT add-on which means nothing to them as they are VAT registered.

Gukophoto

The question to ask yourself is how quickly could you hit the VAT threshold? remember, that if you discount now, they may not be happy to stay when you have to charge VAT, even if they are only going with out for 1/4

pipscot

GlynD wrote: »

You shouldn't have to discount because the companies you are tendering to will be looking at the nett tender from the other applicants. The only thing that is missing from your tender is the VAT add-on which means nothing to them as they are VAT registered.

But the VAT registered companies would normally want VAT to be added to an invoice as they expect it will decrease their own VAT bill.

In general, when selling B2B it is advisable to become VAT registered asap as it increases the likelihood of you getting contracts.

lukcra

Thanks guys,

Well this tender is worth approx 22k.

The threshold is around 70k isnt it.

gukophoto your post contradicts with the 1st response, as surely the company wouldnt mind paying the increased rates should i become vat registered as they will be able to claim the vat back.

GlynD

pipscot wrote: »

But the VAT registered companies would normally want VAT to be added to an invoice as they expect it will decrease their own VAT bill.

In general, when selling B2B it is advisable to become VAT registered asap as it increases the likelihood of you getting contracts.

In general most companies don't care to be honest.

GlynD

lukcra wrote: »

Thanks guys,

Well this tender is worth approx 22k.

The threshold is around 70k isnt it.

gukophoto your post contradicts with the 1st response, as surely the company wouldnt mind paying the increased rates should i become vat registered as they will be able to claim the vat back.

Companies don't care because if you charge them the VAT they claim it back against VAT collected on invoice. VAT makes not difference to anyone who's VAT registered. Your tender price will be nett, as will everyone else's.

Just be sure to point out there is no VAT on your invoices at the moment so they're not scratching their head about why you can do it cheaper than anyone else.

pipscot

GlynD wrote: »

In general most companies don't care to be honest.

Any company that doesn't care is potentially losing money!

There are some companies that will not even deal with non-VAT registered businesses.

GlynD

pipscot wrote: »

Any company that doesn't care is potentially losing money!

There are some companies that will not even deal with non-VAT registered businesses.

You're vat registered so you collect tax for the government. At the end of every quarter you pay that tax to the VAT office. Most companies don't care, even if they are doing a short term investment on the VAT they collect.

That's from experience.

martindow

You can voluntarily become VAT registered below the threshold. If all your business is with people who are VAT registered it will not worry them if you add VAT to your invoices and you would be able to set off the VAT element of your expenses.

GlynD

That is correct Martin and there are some definite advantages to it.