VAT. Is it entirely pointless for a service company?

Thrugelmir

A._Badger wrote: »

There must be any number of small businesses who have been forced to register for VAT for whom even Sage is a PITA and VAT itself a mystery.

Then they should seek professional advice.

Business requires all sorts of skills including marketing, pr, legal , accounts and hr. No one can be an expert in all.

ILW

Fiddlestick wrote: »

I'm not aware of the link between Value Added Tax and the UK's membership of the European Union.

Please enlighten us on how we can blame Brussels...

I believe it is a condition of membership.

A._Badger

Fiddlestick wrote: »

I'm not aware of the link between Value Added Tax and the UK's membership of the European Union.

Please enlighten us on how we can blame Brussels...

All countries in the EU are required to operate a VAT system. As I said, it's one of the 'benefits' of membership.Why, our masters in Brussels even helpfully set a minimum rate a country is allowed to charge.

A._Badger

Thrugelmir wrote: »

Then they should seek professional advice.

Business requires all sorts of skills including marketing, pr, legal , accounts and hr. No one can be an expert in all.

I'm afraid I don't consider that much of an excuse for complicated regulations. By the same logic you could impose all sorts of idiotic ideas and wave away objections with 'hire an expert'.

And, of course, that is precisely what governments do.

ILW

A._Badger wrote: »

I'm afraid I don't consider that much of an excuse for complicated regulations. By the same logic you could impose all sorts of idiotic ideas and wave away objections with 'hire an expert'.

And, of course, that is precisely what governments do.

For a small simple business, VAT is incredibly straightforward.

How much have you been charged, how much have you charged. Take one from the other and pay the bill.

Fiddlestick

ILW wrote: »

I believe it is a condition of membership.

Did we not have Purchase Tax prior to VAT and EEC membership though?

leveller2911

ILW wrote: »

For a small simple business, VAT is incredibly straightforward.

How much have you been charged, how much have you charged. Take one from the other and pay the bill.

Simply not true in the Construction Industry especially when dealing with Grade I & II Listed Properties. Its radiculously complex to administer. The main problem is the VAT office will not make a decision for you its all down to me to decide on whether or not the work complies with a certain part of the rules ,which are as clear as mud.

For example If I knock a hole in a wall and fit a new window its vat free, If I replace an existing wooden window because its rotten with a new one its vat payable but if I replace an existing aluminium window for aesthetic reasons its vat free and this is just one of the many complex situations.

Another one is the reduced vat rate on draught-proofing materials for homes but not always on the labour for fitting those same products , its never ending.

londonTiger

You have to look at the bigger pciture. I'm self employed, but I'm only doing 30K right now, so VAT registstration is out of the picture.

Also I don't deal with other businesses, I make income from web advertising, so I have little expenses that incur vat so I have no reason to claim them.

But if you're a company that is expecting to grow and go over the vat threshold at some point in future, you might as well just stick with it because later on it will be a requirement for you to collect VAT anyway.

Obviously if things aren't going so well, and you don't expect to go over the legal vat limit then do a short term cost/beenfit analysis, are you claiming back more than you are paying? Does VAT registration give you signifant advantage, such as will your clients trade with you if you were not vat registered? Some businesses may not deal with you if you're not vat registered.

ILW

leveller2911 wrote: »

Simply not true in the Construction Industry especially when dealing with Grade I & II Listed Properties. Its radiculously complex to administer. The main problem is the VAT office will not make a decision for you its all down to me to decide on whether or not the work complies with a certain part of the rules.

For example If I knock a hole in a wall and fit a new window its vat free, If I replace an existing wooden window because its rotten with a new one its vat payable but if I replace an existing aluminium window for aesthetic reasons its vat free and this is just one of the many complex situations.

Another one is the reduced vat rate on draught-proofing materials for homes but not always on the labour for fitting those same products , its never ending.

Fair point.
The problems arise when it is used to try to influence spending decisions.

I used to work in the print trade and we had the situation where a leaflet was standard rated, but a book was zero. You just folded the leaflet in half!

I general the system is pretty straightforward though.

ILW

I think a small sliding scale fee paid to the payer would be a good idea though. Eg you need to pay HMRC £10,000 you are allowed to deduct say £200 for doing HMRCs work for them.