Approaching VAT limit, do not want to register for VAT

terra_ferma

berbastrike wrote: »

thank you all for the replies, I really appreciate it.

I currently post my items at the post office, £2.70 each. Can I claim VAT back on this or is this postage exempt from VAT?

VAT is added only to business accounts, depending on the service you use, if you use the PO no vat is added.

Incidentally, you may qualify for cheaper business rates, worth giving the RM business team a call. The price will depend on volume, and on VAT registration (most prices have VAT added, but they have some options that don't attract VAT).
If you sell large volumes they may even collect the post from you.

PS if you want to claim VAT back you need a VAT receipt, that shows VAT number and VAT amount, if you don't have the right type of invoice you can't claim. E.G you buy business-related stuff from a retail store, chances are that they receipt they give you is not a valid VAT receipt.

chalkie99

Just picking out a couple of the comments here:

Sales of £75k since April to date is some good going (well done!).

and

Just do it - you have a successful business

are all well and good if the OP really does have a good business with good margins but the fact is that only the OP knows the figures.

What matters most is whether the sales are to VAT registered businesses or to non-registered customers.

If to non VAT registered customers the critical thing will be if there is enough margin to soak up the cost of VAT on sales without raising prices and losing competitiveness. Was this allowed for in the original business plan?

On the postage side, there will be no VAT to pay or reclaim on the cost of postage but, as P&P will form part of the sale then VAT must be charged to the customer.

Conceivably then, the OP might be selling large volume at low mark up to non registered customers and the addition of VAT to both goods and postage could tip the scales from profitability to loss.

I have no more knowledge of the OP's circumstances than anyone else of course so they might be fine but it is something to consider.

lovinituk

There are only 2 choices really - keep trading and register when the time comes or stop trading for as long as is necessary to keep a 12 month turnover below the VAT threshold.

The former may see problems as described above by chalkie99. Whereas the latter will give competitors a foot in the door and by the time you come to start selling again you may be way down the food chain and take months to increase sales to a decent level again.

trailingspouse

There's no VAT on postage, but it is a legitimate business expense. Basic rule is - if there's a VAT receipt, then there's VAT. No VAT receipt (which includes the supplier's VAT number, and shows the gross amount, the net amount, and the VAT amount), no VAT.

chalkie99

Yes, there is no VAT on postage so as the Post Office are not charging you for it there is none to reclaim (of course, it is still a business expense).

However, you have to charge VAT to your customer on the total cost of sale, regardless of whether or not you itemise the delivery charge.

You cannot, for example, invoice for Goods £10 + VAT = £12 + postage £2.70.

The VAT is on the total amount.

martindow

Just to be a little pedantic. There is no VAT on basic services from the PO, but some enhanced services such as Special Delivery 9am or Airsure to the EU do have a VAT element.

System

thanks all so much for the comments...

one question, Around 10k of my sales are on non vat products (food). So is my total £65k or £75k?

Is the £77k limit on turnover on ALL goods or just vat eligible(most) goods?

lovinituk

berbastrike wrote: »

thanks all so much for the comments...

one question, Around 10k of my sales are on non vat products (food). So is my total £65k or £75k?

Is the £77k limit on turnover on ALL goods or just vat eligible(most) goods?

I was told the turnover is on everything. I sell to non EU countries where it is zero VAT on sales.

Slinky

As I understand it, it's everything including your postage

terra_ferma

martindow wrote: »

Just to be a little pedantic. There is no VAT on basic services from the PO, but some enhanced services such as Special Delivery 9am or Airsure to the EU do have a VAT element.

Vat is not added when purchasing at the post office afaik, but only when buying through a business account.