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Limited by VAT Threshold

Discussion in 'General Business Forum' started by Brum26, Mar 5, 2018.

  1. Mr D

    Mr D UKBF Legend Free Member

    7,376 768
    It would solve the problem of businesses that are able to appear cheaper by keeping below the threshold. If pretty much all businesses are over the threshold then the public has no choice about paying VAT except by using pretty much the tiniest or newest businesses.

    Do all your competitors currently operate below the threshold or is there any above the threshold?
     
    Posted: Mar 7, 2018 By: Mr D Member since: Feb 12, 2017
    #21
  2. pbdesigns

    pbdesigns UKBF Regular Free Member

    107 8
    Customers pay VAT every day.

    Our VAT threshold is currently very high. And as you've seen in this thread, it acts as a bit of a ceiling. It's what stops businesses from growing.

    And is an unfair 'advantage' to small operators.

    We should be encouraging all businesses to grow - not stick a great big barrier in when you reach a certain point.

    If every business was VAT registered, then it would make much more sense.
     
    Posted: Mar 8, 2018 By: pbdesigns Member since: Nov 23, 2011
    #22
  3. DontAsk

    DontAsk UKBF Enthusiast Free Member

    839 112
    I say bring on the proposed lowering of the VAT threshold. It will create a much more level playing field. Any serious business will (should!) plan for VAT from the outset with such a low threshold.

    If there is a real market for your products then customers will still buy. If there's no real market then all sort of other factors could cause your business to fail. You need to be worrying about them, not VAT.
     
    Posted: Mar 8, 2018 By: DontAsk Member since: Jan 7, 2015
    #23
  4. Prettycool

    Prettycool UKBF Newcomer Free Member

    22 4
    We are also in the same boat and can't make our minds up to VAT register. I'm told we can claim the VAT back on some of our stock purchased in the last few months, is this correct?
     
    Posted: Mar 8, 2018 By: Prettycool Member since: Apr 10, 2009
    #24
  5. pbdesigns

    pbdesigns UKBF Regular Free Member

    107 8
    Absolutely, if you deal B2C in your early days you should be charging the price accounting for 20% VAT (just means you keep the '20%'), that way your prices don't change in the eyes of the consumer once you register for VAT.

    Speak to your accountant, they will manage this for you.
     
    Posted: Mar 8, 2018 By: pbdesigns Member since: Nov 23, 2011
    #25
  6. Scalloway

    Scalloway UKBF Legend Free Member

    13,224 2,860
    You can reclaim the VAT on any stock and assets that you hold at the date you register.
     
    Posted: Mar 8, 2018 By: Scalloway Member since: Jun 6, 2010
    #26
  7. DontAsk

    DontAsk UKBF Enthusiast Free Member

    839 112
    Posted: Mar 8, 2018 By: DontAsk Member since: Jan 7, 2015
    #27
  8. GraemeL

    GraemeL Pain in the neck? Full Member - Verified Business

    4,899 1,046
    I suspect that quite a few businesses under the VAT threshold take the view that they have to increase selling prices by 20% if the register for VAT, if they wish to maintain the same level of profit. (And by extension that their sales will fall so its not a good thing.)

    That is not true. It depends very much on the financial structure of the business, if a lot of non people costs are involved then registering for VAT can be attractive. When a company is not VAT registered the cost of all purchases has to include VAT, compared to a VAT registered business whose cost of purchases will not include VAT and is therefore about 20% lower.
     
    Posted: Mar 8, 2018 By: GraemeL Member since: Sep 7, 2011
    #28
  9. DontAsk

    DontAsk UKBF Enthusiast Free Member

    839 112
    Its the ratio between input VAT and output VAT that is key.

    My B2C sales have a good markup and are at 4-5 x cost price so the saving from input VAT is only 20 - 25% of the VAT charged to customers.
     
    Posted: Mar 8, 2018 By: DontAsk Member since: Jan 7, 2015
    #29
  10. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    9,201 1,873
    Back to the basics

    Can you take your product up market from where it is, by that I mean make a better or more appealing product.

    Perceived value can and does make a massive difference to what customers are willing to pay, a higher spec car is seen as worth while, yet the owner may have paid £1500 for a £300 Sat Nav, or £xxx for a better paint job that only costs a few bob more for the maker to paint, a fitted electric adjustable seat when he is the only driver, its just perceived better yet a rip off in real monetary terms
     
    Posted: Mar 8, 2018 By: Chris Ashdown Member since: Dec 7, 2003
    #30
  11. SteLacca

    SteLacca UKBF Enthusiast Free Member

    800 156
    Posted: Mar 8, 2018 By: SteLacca Member since: Jun 16, 2016
    #31
  12. wevet

    wevet UKBF Enthusiast Free Member

    1,078 205
    Perhaps a slight tangent: I use a mobile mechanic and his customers but the parts and consumables are bought by his customers. So, he is billing for his time and not for parts on which he he would only make peanuts.
     
    Posted: Mar 8, 2018 By: wevet Member since: Mar 7, 2008
    #32
  13. Mr D

    Mr D UKBF Legend Free Member

    7,376 768
    Lots of peanuts add up.
     
    Posted: Mar 8, 2018 By: Mr D Member since: Feb 12, 2017
    #33
  14. estwig

    estwig UKBF Legend Free Member

    11,581 4,014
    Every business I've had has been B2C, I've always seen being vat registered as something to aim for, it gives a real impression of being professional and successful.
    My current business for the last 9 years, has almost no overheads beyond marketing, so I claim very little vat back. I simply collect 20% and give it the vatman, like the good little pseudo tax collector I am!

    Up your game, improve your image, improve your marketing, add a perception of value and be proud of your status as a pseudo tax collector. Unless of course you like tyre kickers looking for the cheapest price, in which case: As you were!
     
    Posted: Mar 8, 2018 By: estwig Member since: Sep 29, 2006
    #34