Juice and Sushi

[Ali Amjadi]

Hello,

I am looking for some advice on VAT for my Juice and sushi bar.

We sell Juice, Smoothie and sushi in our small takeaway shop. So all cold foods/drinks and no one eating in the premises. I believe that the sushi side of the business is zero rated and that the juice/smoothie side is standard rate (17.5%). We have yet to register for VAT as when we first opened the business (Aug 2014) we did not expect to go over the threshold. Currently we have just gone over the threshold and need to register.

1. Would I have to pay VAT on sales after the threshold or on all sales - so sales after £82k?
2. We buy fresh fruit, vegetable and fish on a daily basis, from local supermarkets and fish mongers - are we in a position to claim back the VAT on these purchases, despite not having any VAT on their receipts/invoices?
3. Which VAT scheme best suits for my situation - Flat rate, retail etc?

Sorry if the above are silly questions but I am losing the will to live trying to figure out VAT in the food/takeaway sector....

Thanks in advance.

A

 

[Walkol]

Few things -

VAT standard rate is 20%

IF VAT applies on your sales, it is payable on ALL your vatable sales from the date of registration

To claim back VAT you must have a VAT receipt

Without sitting down and crunching the numbers it is impossible to know which VAT scheme would be best.

 

[Ali Amjadi]

Thanks Walkol.

So if I for example register for VAT today, then only the sales from today onwards are vatable?

Seems like I made the mistake of not considering marking up our products to include the additional 20% VAT when we first started trading...

 

[Walkol]

In general yes, however it will be from the date of registration that HMRC give you. So, it could in theory be back dated if you passed the threshold previously but did not register at the time. And you will have to account for VAT on those sales.

Indeed, if you are sure these sales are standard rated then you will either have to raise prices 20% to keep the same margins or take a hit.

 

[MOIC]

A question to the OP.

Do you have an accountant?

If not, why not?

If yes, he should be advising you.

This is a good thread for people to understand that getting into business needs advice from an accountant.

Not to, is playing games and can cost you more money than an accountants services.

Having an accountant should be part and parcel of opening a business.

 

[Ali Amjadi]

I do now have an accountant (didn't when I started the business). He has advised me on certain things but I get the impression it is a 'grey' area for him as he wasn't sure on certain things. Also, I would rather gain a better understanding of the whole system purely for my own reassurance.

 

[john1989]

This is not a difficult area of VAT to grasp. If your accountant is unable to advise you now, he will struggle should you continue to grow.

 

[Walkol]

Getting a good understanding of these things is key, so you're right to do so.

On the info we have here, your accountant not being sure on this is concerning.

 

[Raw Rob]

2. We buy fresh fruit, vegetable and fish on a daily basis, from local supermarkets and fish mongers - are we in a position to claim back the VAT on these purchases, despite not having any VAT on their receipts/invoices?

Assuming you are in the UK, VAT on fresh fruits, vegetables and fresh fish (and most basic unprocessed foods) is 0%.

It's only after they are processed to become a meal that the VAT rate that you have to charge might be 20% (I don't know the specifics on this).

 

[UK Contractor Accountant]

You will only need to pay VAT from your Registration date which will be 1 month after you exceed the current threshold of £82K.

There will be not vat to claim back on the raw ingredients as these products are zero rated.

Sushi sales would be zero rated with the smoothies and drinks standard rated (20%).

I would have thought VAT Retail Scheme would be the Scheme to use. As above seek advice from a qualified Accountant before making any decisions.