VAT Help?

DanM1985

Hi all :wave:, first off sorry if this has been asked before and if its in the wrong forum part but im soooo confused i thought i would ask.

Basically i have recently started buying items from a warehouse and selling them on to make a profit. What i need to know is the way to do it because this is what i am doing at the moment.

I buy the products. I pay the vat at the warehouse. I sell the item without VAT. I make a profit. Then i put aside 25% of profit to one side for the tax/NI.

on the invoices i create i don't show any VAT
just delivery and total of goods.

I keep all receipts to of what i have brought from the warehouse.

Is this the correct way to do it?

Thanks in advance for any help.


p.s also has anyone heard of a pedlars certificate and do i need one if i were to post a leaflet or do door to door selling?

nonnatus

Yes, you're doing it right AT THE MOMENT. You have to PAY VAT to your supplier but can't claim it back or charge it to YOUR customers until your turnover (annual) reaches a certain threshold. In fact, some people register just before their turnover gets that high, just to be safe...

Google HMRC for the current threshold - it used to be £54k but that's going back a bit .

Once you become VAT registered, it's 20% of sales that you need to put aside to pay that quarterly bill.

Back in the bad old days when I owned Pubs, the VAT came as a total surprise every quarter . I NEVER set funds aside for it, instead spending the small amount of cash on every other bill in the place. As a result I was ALWAYS behind on VAT and was on first name terms with my Very Nice HMRC debt recovery Dept. I can't believe they were so tolerant of my idiocy when I look back now! I regularly used credit cards and loans to pay VAT. Suffice to say, the business buckled and folded after 4 years of this.

12 years on, having vowed NEVER to be self-employed again, I find myself running a successful online shop (I inherited the business when my father died). The shop has been run VERY well for 8 years and has no debts. VAT is accounted for weekly and is paid in full and on time. I can't tell you what a liberating feeling that is .

Good luck with your venture. Start as you mean to go on...

antrobus

DanM1985 wrote: »

...Is this the correct way to do it?...

Yes. Unless your sales are more than the VAT registration limit of £79,000.

DanM1985 wrote: »

...p.s also has anyone heard of a pedlars certificate and do i need one if i were to post a leaflet or do door to door selling?

Yes.

You're supposed to have one if you're selling door to door. Posting leaflets doesn't count.

https://www.askthe.police.uk/Content/Q239.htm

googler

nonnatus wrote: »

Yes, you're doing it right AT THE MOMENT. You have to PAY VAT to your supplier but can't claim it back or charge it to YOUR customers until your turnover (annual) reaches a certain threshold. In fact, some people register just before their turnover gets that high, just to be safe...

Google HMRC for the current threshold - it used to be £54k but that's going back a bit .

Once you become VAT registered, it's 20% of sales that you need to put aside to pay that quarterly bill.

No, you've got it wrong - the threshold is the point at which you must register for VAT. If your turnover is below this, it's optional, and you can decide whether or not you register.

Whether or not the OP claims back VAT and charges it to his customers (can't do one without the other) is determined solely by whether or not he is VAT registered.

From HMRC;

http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm

"If your trading is below the threshold for registration
If you're carrying out one or more of the business activities described above but you haven't crossed the registration threshold, you can still apply to register for VAT voluntarily - it might be of benefit to you. See the section in this guide on voluntary registration. In any case, you should regularly check your turnover to see if you need to register."

DanM1985

Thanks for replies.
Sorry mine has taken a while. wasn't ignoring anyone.
i highly doubt i would have a turnover of £79,000 tbh.
so i can continue with the way i am doing it.

as for the pedlars certificate. I went to my local police station they have not even heard of one nor is it on the system.
so im a but stuck with that one.

I guess if i post rather then knock and they order via phone/internet that i shall not need one.

Thanks again for advice.
Daniel

paddyrg

Just to note, I think a pedaller or hawker has to stay mobile and keep moving, otherwise they become Street traders and have different rates/fees to pay. As such, don't buy big heavy stock!