do i have to charge vat again

[zogyboy]

ok so i am setting up an shop i have got some goods from an wholesaler where i have all ready paid vat on the goods we are setting up an partnership.

so when we sell the goods do we get are profit from the price point off our vat so if we got somthing for 1.00 at the wholesaler it would have cost us 1.20 so in order to make an profit we charge more then 1.20 so lets say 1.40 to make it easy would we also have to charge the customer vat on top off are mark up cost of 1.40 as well ?


thank you for your help

 

[BusinessDeli]

You purchase it for £1+20%=£1.20
You sell it on after adding your margins, example, £2+20%=£2.40 (if you're not VAT registered you can't charge VAT)

You owe HMRC 40p
HMRC owes you (if its claimable and you're registered) 20p.

See http://www.hmrc.gov.uk/bst/advice-team-events/how-vat-works.pdf

It's complex stuff and I use an accountant because it gives me a headache thinking about it! Note there are different classes of VAT dependent on the goods in question so CHECK.

 

[MyAccountantOnline]

ok so i am setting up an shop i have got some goods from an wholesaler where i have all ready paid vat on the goods we are setting up an partnership.

so when we sell the goods do we get are profit from the price point off our vat so if we got somthing for 1.00 at the wholesaler it would have cost us 1.20 so in order to make an profit we charge more then 1.20 so lets say 1.40 to make it easy would we also have to charge the customer vat on top off are mark up cost of 1.40 as well ?


thank you for your help

Are you/your business VAT registered?

 

[zogyboy]

no we are not VAT registered dose this change things ?

 

[Anna Chandley]

no we are not VAT registered dose this change things ?

I you are not VAT registered then you cannot charge VAT to your customers.

Anna

 

[zogyboy]

so do we keep the vat are selfs then for hrmc we did all ready pay vat on our stock so how would that work ?

 

[Anna Chandley]

so do we keep the vat are selfs then for hrmc we did all ready pay vat on our stock so how would that work ?

There is no VAT to keep as you have not charged any VAT on your sales.

 

[lynxus]

You pay VAT on what you bought to sell.

You then add margin to it to make profit.

You cant claim the VAT from your goods nor can you charge VAT as your not vat registered.

For example:

You buy goods at £1 each (+ 20p vat ) so that cost you £1.20
You sell for £2. ( No vat )
You have made 80p profit.

You pay your supplier VAT but you dont charge your customers.

 

[Raw Rob]

Basically, if you are not VAT registered, you just ignore VAT. You pay the wholesaler the VAT inclusive price (eg £1.20 in your example) and you sell it for whatever you want.

Nothing else to be done regarding VAT until your turnover get's to the point where you need to register (around £77,000 not sure of the exact figure off the top of my head).

 

[zogyboy]

Raw Rob thank you so i was right in the first place just some other person told me i was not so i got an bit confused so we just buy are stock what it cost us and we just sell it for what profit we want end off

Great nice an simple instill we rech and large amount

 

[WHARTY]

I you are not VAT registered then you cannot charge VAT to your customers.

Anna

Nothing wrong with adding an extra 20% margin though!

 

[Christine Hough]

That's all fine providing you do not exceed 77,000 in 12 months sales.

If you hit that figure you will have then to register for VAT

But for the moment ignore it, but do not set your prices down lower just because you are not charging VAT. Prices should be set according to the market value, and your strategy. (Ie are you aiming for low margin/high turn over or low turn over but high value sales?)

 

[crphillips]

If your not VAT registered and your turning over less than 77k (or whatever the threshold is nowadays) per annum then yoU simply just buy something and sell it for more than you paid.

After you've paid staff, premises, transport, utilities........etc the rest is yours....less income tax of course.