VAT

[Hedgehog Toys]

Just as a passing thought regarding VAT. I am not registered for vat so when i send an invoice to my customers do i show the amount with or without the vat amount indicated??

[Jayne]

You don't charge them VAT if you are not registered to do so, or show it on your bills. :D

Ask Alpha for the superman techy version :D

Jayne

[DuaneJackson]

do i show the amount with or without the vat amount indicated??

There shoud be no VAT amount to show. You may have paid VAT when you bought the goods but you can't/don't charge your customers VAT.

[Joyous]

Ask Alpha for the superman techy version :D

Here's the superwoman techy version:

The words "VAT" or "value added tax" should not appear anywhere on your invoice. :lol:

...sorry, couldnt resist.

Regards

Joy

[Anonymous]

I too am trying to get my head around VAT...

Am I right in thinking that Hedgehog0045 is able to claim back VAT paid on purchases but is not required to pay VAT to HM Customs, as it is not being charged on???

And there is a limit to how much Hedgehog0045 can make in profit before he/she (sorry!) must become VAT registered...?

SM

[creacom]

I too am trying to get my head around VAT...

Am I right in thinking that Hedgehog0045 is able to claim back VAT paid on purchases but is not required to pay VAT to HM Customs, as it is not being charged on???

And there is a limit to how much Hedgehog0045 can make in profit before he/she (sorry!) must become VAT registered...?

SM

I am sure the accounting guys and girls will come in here later and either back me up or tear my explanation to bits but....

There is a limit yes, It is £60K or £65K a year, I cant remember exactly.

To be able to claim back VAT you need to first be registered with the HM Customs. You can do this even if you are not reaching the limit that I mentioned above.

You can them claim back VAT on your purchases AS LONG AS the amount of VAT that you have charged your clients isnt over that amount.

For example.

I pay £50 of VAT on purchases

I sell my items and charge my client £25 of VAT

So there, the VAT man owes me £25.

IF

I pay £25 of VAT on purchases

I sell my items and charge my client £50 of VAT

I then owe, Mr nice VAT man, £25.

All of the above only applies if you are VAT registered. If not, you are not allowed to charge VAT on your sales.

And that was a lesson in VAT by Jacqui !!

:lol:

Hope it helps.

Jacqui :D

[Anonymous]

Thanks Jacqui!

I am reading several books about bookkeeping at the moment, but I think I go into information overload sometimes!

At least I was halfway there :oops: !!

SM

[BMS]

Hi SM

Creacom has hit the nail on the head.

If you are not VAT registered then ignore VAT completely as it doesn't apply to you.

60K of taxable supplies is the threshold for VAT registration.

You can voluntarily register.

You need to way up whether it is worth whole doing this.

Any bookkeeping issues, just post them as there are plenty of people who can help you.

[Hedgehog Toys]

So when i work out the retail price of a product would you work it out on the cost price including vat or before vat.

I have a certain % mark up on the products so i was curious as to how i should apply that mark up?

[multilingual]

So when i work out the retail price of a product would you work it out on the cost price including vat or before vat.

I have a certain % mark up on the products so i was curious as to how i should apply that mark up?

Forget about VAT altogether.

Your purchase cost price may or may not include VAT, but to you (as you are not registred for VAT) it makes no difference. What you pay is what you pay. You can't reclaim any of it so it comes out of your profit.

If you buy something at £10 + VAT then it costs you £11.75, so that is your cost price.

If a VAT registered company buys the same item it will still cost him £11.75 to buy it but he claims the £1.75 back so his cost price is £10.

Your sales invoices should not mention VAT at all.

If you register for VAT at a later date you will still be able to go back and reclaim a lot of the VAT that you have already paid out (I think it is 2 years previous)

BUT be warned, you can only claim back VAT on goods that are still in your possession at the time of registration

Remember that point because if you think you will be able to go back and reclaim all the VAT you will end up in trouble.

(Trust me because I did that due to some crap information from Customs)

:roll:

JB

[Hedgehog Toys]

Thanks for that, I had been putting the % mark up on the cost price including the vat so at least i got hat bit right.... :roll: :lol:

[multilingual]

Thanks for that, I had been putting the % mark up on the cost price including the vat so at least i got hat bit right.... :roll: :lol:

That's right.

Until you are in a position to claim the VAT back then it has to be included as a cost.

JB

[BMS]

As you are not VAT registered any % mark up would need to be based on the price of purchase.

Assuming a 10% mark up...

eg If you buy an item A at :

£10 + Vat (£1.75) = £11.75

If you apply the mark up to the pre VAT price

£10 + 10% = £11 : but price paid was £11.75 so a loss of 75p per item.

If you apply mark up to to gross price

£11.75 + 10% = £12.92 : a profit of £1.17 per item