Staying under the VAT threshold

jrspigot

A friend has his own business but is afraid to grow it due to the VAT threshold.

At the moment , he doesn't charge VAT , but since a certain amount of the expenses and turnover of the business is the cost of diesel (because he transports cars for clients), could this in effect be paid by the client since VAT is already paid on this, and thus not be included in the business turnover?

the same goes for when he has to make an overnight stay in a hotel.

Does anyone have any thoughts on this ?

Thanks for any ideas since this would make a big difference.

HappyMJ

A sole trader providing services to non-VAT companies and individuals would just about always be better off not going over VAT threshold if possible. If he's providing services to companies it's highly likely they are registered for VAT and can use the payments they make to him to reduce their liability for VAT themselves. He can then use the VAT payments he makes to other companies on the expenses he has to reduce his own VAT bill.