VAT = Quite a few questions

[Vacparts]

Hi Folks,

We are new to business and have only been going about 3 months although the shop has been establised 23 years and the owner retired.

Basically a few questions but to set the scene our turnover is well below the vat threshold of around 68'000 and we sell parts for domestic appliances and repair them as well.And we are not VAT registered So heres the questions.

1.We do not charge VAT to customers on parts or labour but should we show VAT in our books on the sales part ?.Or just the basic total cost.so if its £25 for a repair the sale is £25 recorded in the book not £20.63 plus 17.5 % ?.

2.Reading up on this mammoth subject ( vat ) is my understanding correct that if we go Vat registered we can claim all our vat back on what we buy for stock because obviously we have to pay vat to vat registered companies for stocking our shop?.

3.What does vat registered incorporate how much hassle is it basically.

4.If we went vat registered again my understanding is we can go vat registered even though were under the threshold and dont have to charge vat on our sales is this correct.

5. Turnover towards vat threshold - what is included in this,my understanding again is absolutley everything to do with keeping the shop running so cost for stock,all bills and wages.

Basically what im asking if your turnover is around say 55'000 what am i best doing registering for vat or NOT registering.

please answer in laymans terms as un technical as you can make it lol :p

Thanks

Alan

[Williams lester]

If you are selling to the public, then it is unlikely to be worthwhile registering voluntarily. You would have to charge VAT on all your sales (or absorb the costs in to the prices you already charge).

[Vacparts]

If you are selling to the public, then it is unlikely to be worthwhile registering voluntarily. You would have to charge VAT on all your sales (or absorb the costs in to the prices you already charge).


Yes we are selling to the public.

But on stock bought i have done a quick calculation for the year on our past 3 months buying stock for the whole year would cost us around 17'500 per annum so if im right we could claim vat back of roughly £3000.

Does going vat registered cost money ?. I though it only cost money if you were over the turnover threshold.

And please also do we have to show vat in the books on the sales part if we were not vat registered ?.So basically dont charge it.

Thanks for the help.

[elainec100@cheapaccounting]

If you register for vat to reclaim it on purchases then you have to charge it on your sales - so a hike of 17.5% soon to be 20%

[elainec100@cheapaccounting]

4.If we went vat registered again my understanding is we can go vat registered even though were under the threshold and dont have to charge vat on our sales is this correct.


This is incorrect

Have a read here:

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

[Williams lester]

If you register you will have to charge VAT on all your sales....

And, no, don't show VAT in your books if you are not VAT registered.

Surely these are questions you should be asking your accountant.

[David Griffiths]

1.We do not charge VAT to customers on parts or labour but should we show VAT in our books on the sales part ?.Or just the basic total cost.so if its £25 for a repair the sale is £25 recorded in the book not £20.63 plus 17.5 % ?.

If you are not VAT registered, you don't need to show VAT anywhere in your records.


2.Reading up on this mammoth subject ( vat ) is my understanding correct that if we go Vat registered we can claim all our vat back on what we buy for stock because obviously we have to pay vat to vat registered companies for stocking our shop?.

Correct


3.What does vat registered incorporate how much hassle is it basically.

With a decent bookkeeping system there isn't a lot of hassle, but you do have to keep certain records and make returns on time.


4.If we went vat registered again my understanding is we can go vat registered even though were under the threshold and dont have to charge vat on our sales is this correct.

This is the big flaw in your thinking. If you are VAT registered then you have to account for VAT on all takings after the registration date, even if you are below the normal threshold.


5. Turnover towards vat threshold - what is included in this,my understanding again is absolutley everything to do with keeping the shop running so cost for stock,all bills and wages.

Turnover = sales. Stock purchased, bills and wages have nothing to do with it


Basically what im asking if your turnover is around say 55'000 what am i best doing registering for vat or NOT registering.

See Dave's answer above. Basically you would claim nearly £3000 back on your purchases and lose £8000 from your sales

Bad idea!

[Vacparts]

Thanks for all this.

Those once murky waters are becoming alot clearer now.