Approaching VAT limit, do not want to register for VAT

JasonLVC

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?

If £10k of your sales are zero rated food, then these sales still count towards the VAT threshold of £77k. The only income that doesn't count towards the threshold is exempt income (which are very specific items such as funerals, insurance, educations, healthcare, etc).

The zero rate of VAT is a rate of VAT, just at 0%. Don't get into the mindset of saying that food is "VAT free", that is not correct, VAT is charged at 0% - the point being by charing VAT 9albeit at 0%) you are entitled to reclaim VAT on your purcases, if you were not charging VAT becuase you made exempt sales you could not reclaim any VAT.

lovinituk

terra_ferma wrote: »

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

Martindow is correct. The prices quoted/charged at the PO for some specific services are inclusive of VAT. If you ask for a receipt it is a VAT receipt and shows the VAT element. I have one from the PO on Monday when I sent something Special Delivery.

Cardinal-Red

Just a small point for JasonLVC but HMRC's powers under the disaggregation rules only apply prospectively from the date of the direction.

I may have missed in this thread where the legal form of the relative bodies was covered - clearly if the OP is a person operating as a trader, then "separation" would never work, as it is the person who is registered and so all their business activities take place through that registration.

But if, as I think has been suggested, two legal entities are used (or two people run the separate businesses) then there is no way of HMRC revisiting the original split of the business (unless they suspect fraud in which case we're in a different game entirely!)

Note for absolute clarity this is not saying its ok to artificially split a business!

Cardinal-Red

lovinituk wrote: »

Martindow is correct. The prices quoted/charged at the PO for some specific services are inclusive of VAT. If you ask for a receipt it is a VAT receipt and shows the VAT element. I have one from the PO on Monday when I sent something Special Delivery.

It's not a case of personal v business.

Anything outside of the Royal Mail's Universal Services Obligation should now be subject to VAT... whoever the customer is.

terra_ferma

Cardinal-Red wrote: »

It's not a case of personal v business.

Anything outside of the Royal Mail's Universal Services Obligation should now be subject to VAT... whoever the customer is.

it's a matter of both, and rather confusing...
Business mail and business packets are charged VAT. But there is also a type of business account that doesn't get charged VAT, it depends on the codes you use.
Non-vat registered business are better off using the latter.

lovinituk

Cardinal-Red wrote: »

It's not a case of personal v business.

Anything outside of the Royal Mail's Universal Services Obligation should now be subject to VAT... whoever the customer is.

Not sure why you quoted my post seeing as I didn't mention personal vs business in that post?!

However as terra-ferma states, there are differences between personal/business and some business/business costs now. I pay VAT on all UK postal services through my business account now that I am VAT registered.

Cardinal-Red

lovinituk wrote: »

Not sure why you quoted my post seeing as I didn't mention personal vs business in that post?!

However as terra-ferma states, there are differences between personal/business and some business/business costs now. I pay VAT on all UK postal services through my business account now that I am VAT registered.

Not that it matters but I quoted your post because you said a previous poster was correct and it seemed appropriate to use yours. No offence intended.

Regardless, I will reiterate. It doesn't matter if you're a business customer or personal; or whether you use a business account or otherwise.

Some services, I.e. those within the Universal Services Obligation and others subject to non market distortive price controls, remain exempt from VAT. Others are standard rated.

It's the service you buy that determines the liability, not your status as the customer.

lovinituk

Cardinal-Red wrote: »

Some services, I.e. those within the Universal Services Obligation and others subject to non market distortive price controls, remain exempt from VAT. Others are standard rated.

As we've already said it's not quite as simple as that. There are 2 different codes you can use with an online business account. One means you pay VAT on 1st class, for example, and another service means you don't pay VAT on 1st class. I'm not sure what comes under USO but I'm assuming it's the standard services like 1st class.

Cardinal-Red wrote: »

It's the service you buy that determines the liability, not your status as the customer.

Seeing as some services are only accessible depending on your status as a customer, then one goes hand in hand with the other!

martindow

I've found RM's list of which services are liable for VAT

Royal Mail products that are liable to VAT:

Packet Despatch
• Special Delivery™ 9.00am (stamps, franking and account)
• Special Delivery™ Next Day (account)
• Royal Mail Tracked® and Tracked™ Next Day
• Royal Mail Sameday®
• Packets (including Standard Account packets, Packetpost, Packetsort and Packetsort Plus)
• Packetpost Returns
• Recorded Signed For™ will also become liable to VAT if purchased as an add-on to a standard rated service. In all other circumstances it will remain VAT exempt.
Marketing Services
• Advertising Mail™ (formerly Advertising Mail 70,120, and 1400, including Big Book and Heavyweight options)
• Sustainable® Advertising Mail (formerly Sustainable Mail)
• Advertising Mail™ with Response (formerly mailmedia®)
• Door to Door™
Publishing
• Publishing Mail (formerly Pressstream®)
General Correspondence • Business Mail 1st Class (formerly Standard Account letters and large letters, Automated Standard Tariff Large Letter (ASTLL), Cleanmail®, Cleanmail® Plus and Cleanmail® Advance, Mailsort® 70, 120, 700 and 1400, and Walksort®)
• Business Mail (formerly Standard Account letters and large letters, Automated Standard Tariff Large Letter (ASTLL), Cleanmail®, Cleanmail® Plus and Cleanmail® Advance, Mailsort® 70, 120, 700 and 1400, and Walksort®)
Response Services
• Response Services License fees
• Special Delivery™ with Response
• Business Reply Plus and Freepost Plus
• Business Reply Standard, Freepost Standard and Freepost NAME
International (VAT will only be added to EU destinations)

• International Contract Tracked and Secure Services (Contract Airsure® and Contract Signed For)
• International Contract Services (Mixed Mail, Letters, Flats, Packets, Destination Sort and Mbags)
• Airsure®
• International Admail and Admail Packets
• International Redirections
Outbound Mail
• Collections
Inbound Mail
• PO Box®
• Timed Delivery™
• Early Collect
• Early Extraction™
• Pre-sorted Delivery
• Selectapost
• Local Collect®
• Diversion
Other Products
• Business Mail Secure
• Admail
• Callers Services
• Posting Cheque administration charge
• Private Posting Box
• Royal Mail administration fee for collection of HMRC charges
• Royal Mail Pouch Services
• Rural Newspaper Delivery
• Rural Carriage of Goods
• Redirect Diversion
• Ministerial Pouch services
• Do not redirect
• Safebox
Contract Products
• Mailroom Management
• Mailroom Consulting Services
• Royal Mail Relay®

Royal Mail products that remain exempt from VAT, in addition to free products

UK

• 1st and 2nd Class (stamps, online, franking, account*)
• Special Delivery™ Next Day (stamps and franking)
• Standard Parcels
• Recorded Signed For™ (if purchased with a VAT exempt service)
• Keepsafe™ (personal and business)

*1st and 2nd class account is a new product that was launched in April 2012. This is a Universal Service which does not qualify for volume related discounts. Royal Mail also offers a 1st and 2nd class service called Business Mail which is available on account. Volume related discounts are available on this service for larger postings and VAT is liable

International
• Airmail
• Surface Mail
• International Signed For
• All HM Forces Mail (BFPO)
Inbound Mail
• Redirections within UK (personal and business)


http://www.royalmail.com/customer-service/terms-and-conditions/vat-changes

It is very complicated as there are so many tariffs.

lovinituk

martindow wrote: »

It is very complicated as there are so many tariffs.

It is complicated because the same service can be included in various tariffs.

Take 1st and 2nd class for example, which on that are shown as VAT exempt. Well they are not always VAT exempt - it depends on the tariff you are on...

Purchase at PO counter (stamps) - VAT exempt
Franking - VAT exempt
Business tariff (BPL) - VAT exempt
Business tariff (STL) - VATable at 20%
Packetpost - VATable at 20%

Its basically the same service in all cases and the letters/packets are processed the same at the mail centres but in some cases you have to pay VAT, others you don't. Obviously a personal customer will never pay VAT as they will always purchase stamps. A business customer will have a choice. I have access to the last 3 on my list. Up until recently I was using BPL. Since becoming VAT registered I now use Packetpost as I claim the VAT back and its the best price for me.