Non-Registered VAT Supplier

[rhysgregory]

Hi.

I'm knew to this so I thought i'd post my query. I'm non-registered for VAT as i'm a sole trader and this is my first 'order'.

I'm purchasing my product from another business and so as I'm non-vat registered I'm paying the VAT on the invoice.

I'm then supplying a company which is VAT registered but can't include VAT on the invoice as I'm not registered so they can't claim the VAT back right?

So whatever they buy from me, do they then charge VAT to the end customer (as they're registered) + their % profit margin which = customer sale price?

I wanted to charge the product at £7 originally and then for them to sell the product at a retail price of £8. If they have to pay VAT on the £7 they buy from me + their margin the price would have to be above £8? - unless I supplied it at below £7 so that the sale price remains at £8?

If this is the case, would it be better for me to register for VAT, claim the VAT I pay on the original product purchase, charge vat to buying business so that they can claim it back?

So confused right now....

[Williams lester]

If the majority of your customers will be VAT registered businesses then you may be better of registering for VAT. This is something that your accountant will be able to advise on, as it is not always obvious what the best solution for your circumstances will be without knowing a bit more about the business etc.

[rhysgregory]

Thank you for the advice :)

[Chris Ashdown]

Seems a very small markup for the company, most would look for minimum of 40% markup for general sales

[rhysgregory]

As i'm a student they're willing to take a lower margin than usual. The problem is as stated above, non vat registered supplying a vat registered business.... when supplying businesses, should I be vat registered?

[elainec100@cheapaccounting]

when supplying businesses, should I be vat registered?


well that is a big question - vat registration brings with it a lot of duties as well as having to charge it on all of your sales.

Have a read of this:

http://www.franklyaccounts.co.uk/glossaryvathelp.php

[Minuteman Press]

If you are selling a product to the distributor at £7 and they wish to sell at £8 (including VAT) they will make a gross loss of £0.19 per unit.

VAT cannot be reclaimed if it was never paid.

Hope this helps.

Regards

Peter