Selling goods to businesses when self employed

[gbrown100]

Hi,

I am in full time employment via PAYE and also self employed in the IT industry. Normally I do not get involved in supply of hardware but I have been asked to purchase £500 worth of goods and install them. They know I am not VAT registered and don't mind so how best should I deal with this?

Can I simply bill them say £700 for install of "IT system" and put the cost of goods as an expense to my business or do I have to state that goods are supplied somewhere?

I don't want to show £700 income on my tax return and pay tax on all of it...

Thanks for any advice!

[elainec100@cheapaccounting]

You record £700 as a sale and £500 as a purchase - profit = £200 and that is what you pay tax on.

[Zeno]

Incidently, remember if you are supplying goods it is a whole different ball game to your business before.

[gbrown100]

Incidently, remember if you are supplying goods it is a whole different ball game to your business before.

Well.. This is the thing, I am not sure how it is different. What ramifications are there for me doing this? This is an exception to my rule, normally I would have the customer buy the equipment and I would commission but in this instance they are in a hurry and don't want the hassle at their end.

[Zeno]

Well.. This is the thing, I am not sure how it is different. What ramifications are there for me doing this? This is an exception to my rule, normally I would have the customer buy the equipment and I would commission but in this instance they are in a hurry and don't want the hassle at their end.

I would imagine that up until now that if your clients hardware goes tits up then you just get to shrug your shoulders as it is nothing to do with you.

Now that you have supplied the hardware, this is of course different.

[Maslins]

Also the VAT you paid on the IT equipment will be "lost" as you cannot reclaim it, and are, in effect, recharging the gross amount to the customer with no mention of VAT, hence they can't reclaim anything either.

Is it not possible for you to advise the customer what to buy, they buy it, and you simply install it for your £200 charge?

(this of course makes no difference if the customer themselves are not VAT registered)

[gbrown100]

I would imagine that up until now that if your clients hardware goes tits up then you just get to shrug your shoulders as it is nothing to do with you.

Now that you have supplied the hardware, this is of course different.

I see - that would not be strictly true, if I advise a client to use a particular piece of hardware then I tend to support it assuming I have a maintenance agreement with them. Failing that they have the hardware warranty! I would work on the premise that this arrangement would still stand unless there is something specific in law that says I have to support it...

Also the VAT you paid on the IT equipment will be "lost" as you cannot reclaim it, and are, in effect, recharging the gross amount to the customer with no mention of VAT, hence they can't reclaim anything either.

Is it not possible for you to advise the customer what to buy, they buy it, and you simply install it for your £200 charge?

I am not VAT registered and do not intend to complicate my life quite that much yet! They are aware of this so this should not be an issue. Yes ideally they would buy the hardware directly and I would simply install it but for they areof the opinion that they "just want it done". I am happy to accomodate them because this could lead to a decent paying support contract.