Mr Darling - How about this for help for new business .

[elaine@cheapaccounting]

I will keep it short (long posts never keep my attention) …

How about this as a measure of help for small / new businesses plus the consumer:

Increase the VAT Registration Threshold to £100,000


It would help:

• Small businesses to remain competitive
• Reduce admin burden of vat e.g. returns, pricing etc
• Benefits of non vat inclusive price passed onto the consumer
• Very easy to implement – no system changes or re-pricing on shop shelves

That is my proposal – vote now

 

[elaine@cheapaccounting]

If people would like to add comments for the reason for their vote that would be great.

 

[Norseman]

so long as businesses still have the ability to opt in at levels under this it doesn't make a great deal of business difference to b2b businesses does it? I've more often seen arguments FOR being vat registered than AGAINST.

 

[elaine@cheapaccounting]

That is true for businesses where the end customer is vat registered. For businesses where the end customer is not vat registered there is a benefit for the end consumer (prices without vat added on) plus the ability for business to be competitive.

I was thinking of small businesses such as hairdressers, beauty, gifts, bookkeepers etc etc ....

 

[jholden]

I have voted Yes, but as already said the opt in to be kept.

Those who are B2B will be VAT Registered, but for those businesses like hairdressers especially this would be fantastic as the low threshold is what holds many hairdressing businesses back.

Unfortunately, there is more than an increase in the VAT threshold needed.

Jason

 

[elaine@cheapaccounting]

I agree on opt in (voluntary registration) and will update my opening post for this.

I also agree more needs to be done.

I saw this as a quick fix and something which could happen NOW - no HMRC system changes etc.

Every little helps

Update - can't seem to edit my opening post.

So assume it should include keeping opt in (voluntary registration).

 

[Zeno]

I voted yes and agree that it would benefit many of the trades, hair dressing etc.

Maybe a controversial point but I would like to see the flat rate scheme being restricted to actual trading businesses - "Self Employed"/"Contractors" who invoice the same client (Basically have a job) 12 times a year unfairly benefit in my opinion.

 

[jholden]

Personally I have always thought to have an impact that puts money into everyones pocket it is time that the personal allowance was increased to at least £10,000 per annun, however, I have not idea of the cost of this to the treasury, but hey ...

Also, MP salaries of c.£60k and expenses totalling c£80m pa (for everyone), surely there are cuts to be had here ..

Jason

 

[elaine@cheapaccounting]

Are there any businesses on here approaching the vat registration threshold?

Any view?

Also for those that voted no - can you give any feedback as to why please. Thanks

 

[Alicatt]

Hi Elaine,

I voted No (I'm using my alternative userid here to protect my business brand from what I'm about to say!)

Within the craft sector, serious businesses - the ones that stay around for a long time, employ people etc - are having to compete with the hobby sellers with no overheads who stay under the VAT threshold and can undercut on prices. Most make little or no profit and generally don't last long, but as soon as one gives up another comes along.

Raising the VAT threshold might help consumers but wouldn't help many businesses. And if Mr darling decides to muck about with the VAT rate, I will scream!

 

[hurst75]

YES YES YES

I am a sole trader, and have been VAT registered and then dipped below and deregistered. I will probably soon hit the threshold again and I'm dreading it.
I found VAT to be a major admin headache. The flat rate scheme never benefitted me so that wasn't an option.
I personally think the threshold is far too low and £100k would be far more suitable.
Also 90% of my work (surveying) is B2B and I have never found a problem e.g. clients not taking me seriously as a business, or thinking that they are somehow losing out because they can't reclaim the VAT.

Finally, in response to Alicatt, I'm afraid that the issue of smaller independents is just life and business. And if you work in a sector which sells to the public then your always going to encounter that problem however low or high the threshold is. Its a pisser!

 

[themonk]

I'm just below the VAT threshold. To grow I'd need to VAT register. This means having to increase my turnover by nearly 10% this year just to stand still.
My business would suffer badly with the VAT increase as well as affect my own income. A rise to £100,000 threshold would be of enormous help to me! A rise to £120,000 would be even better.
I do very little b2b but sell direct to the public in their homes.
VAT registering means I'd be the loser all round!

The increase therefore gets my vote!

 

[spigwell]

Vat for small retail businesses is an absolute killer.

If I turn over 60K per year and work on a profit of 33% i earn appx £20k If I turn over 70k a year I make £19k per year. So by increasing turnover by a little over 15% I loose £1k.

Perhaps a more better way for the small business would be to have vat payable on profit and not on turnover. (similar to tax i suppose).

Gary

 

[themonk]

Perhaps we could set up an e-partition on the Downing St. web site?!!!

 

[elaine@cheapaccounting]

Perhaps we could set up an e-partition on the Downing St. web site?!!!

if someone tells me how to start it and you all agree to sign it them I'll give it a go.

 

[elaine@cheapaccounting]

looking at the e petitions thing now ... more soon

 

[elaine@cheapaccounting]

Have created it - am awaiting approval

 

[maxine]

Elaine

Good on you for posting this and I will def sign when its approved

I wont say to much on an open forum but I am very careful with my invoicing to keep under the VAT threshold keeping a running 12 month check to make sure I am under it. Most of our work is with private domestics and we would have to go over it by a lot to break even which I am not confident that we can do at the moment / next few months.

Examples of being careful with invoicing includes not invoicing for materials directly (ie; bathroom suites) but just act as an introducer to the manufacturer/supplier and get profit another way (loyaly schemes, trade accounts etc). Also subcontractors now having whole jobs passed to them so they can invoice instead of us (negating cis too) and they just pay us a management fee/referral fee. Am also careful to time the invoicing of jobs so that the large ones are not in the same invoicing period.

It's quite a lot of faffing about but we are having to tread water at the moment so it would help us a lot if lifted to £100k

Would love to see the first £10k profits free from corp tax too or am I just being greedy Surely others would support that too

Max

 

[elaine@cheapaccounting]

Max

You could also operate a client account - collect the money from them, buy the materials on their behalf and charge a commission for this service.

Totally off thread though

Anyway thanks for supporting this.

It is good to see small businesses getting behind the sense of why I am proposing it

Thanks all

 

[spigwell]

Once this is up and running it may be an idea to inform the FSB and see if you can obtain there backing for this.

 

[Alpha]

Hold on

You are suggesting that this government could increase personal allowances, vat registration threshhold and a nil rate CT band.

The same government that wishes to hammer small companies with ill thought out income shifting legislation, have increased the NI rates, removed that 0% band, increased the small company rate year on year to 22% whilst at the same time reducing the large company rate to 28%, OK gave an AIA of up to £50k spend but how many small businesses regularly spend £50k on assets each year............on balance do you really think that this labour government gives a hoot about small businesses???

And can one of you PR guys get this stuck under the nose of some government somebody?

 

[elaine@cheapaccounting]

Hold on

You are suggesting that this government could increase personal allowances, vat registration threshhold and a nil rate CT band.

The same government that wishes to hammer small companies with ill thought out income shifting legislation, have increased the NI rates, removed that 0% band, increased the small company rate year on year to 22% whilst at the same time reducing the large company rate to 28%, OK gave an AIA of up to £50k spend but how many small businesses regularly spend £50k on assets each year............on balance do you really think that this labour government gives a hoot about small businesses???

good points but it doesn't stop me trying

 

[maxine]

Max

You could also operate a client account - collect the money from them, buy the materials on their behalf and charge a commission for this service.

Totally off thread though

Anyway thanks for supporting this.

It is good to see small businesses getting behind the sense of why I am proposing it

Thanks all

That sounds like a WONDERFUL idea! Trying to manage the movement in my trade accounts with suppliers is a real faff. Kind of like an odd little savings scheme

I take it I don't need to invoice for monies for client account? That it is just a request for payment rather than a sales invoice?

Thanks for the tip

 

[kellytoys]

Are there any businesses on here approaching the vat registration threshold?


Yes I have just gone over but not by a lot. 100k would be great

 

[David Griffiths]

It's not going to happen anyway, because the VAT threshold is already as high as is permitted under European law.

I voted no, because the existing VAT threshold is already a big barrier to growth, and increasing it would increase the size of that barrier. If would simply be different businesses that have the problem.

Some countries actually have no threshold, and if you are in business you have to register for VAT. That would remove the problem of businesses just over the threshold competing against non registered traders.

I realise that this may not make me universally popular, but I can't find a smiley with a tin hat!

 

[elaine@cheapaccounting]

See now that makes me more determined.

Us women would never have got the vote if we listened to David and Alpha

 

[David Griffiths]

So I presume that it's the fact that I told you that you couldn't have it that's got you all riled up?

Not the fact that I put forward some rational arguments why it shouldn't be done?

Sounds familiar - to any man!

 

[elaine@cheapaccounting]

So I presume that it's the fact that I told you that you couldn't have it that's got you all riled up?

Absolutely and the problem with that is ????

I have been like that for 40 odd years - am unlikely to change now.

 

[Philip Hoyle]

I have several small business clients who would love an increase in the VAT threshold, particularly small cafes, fish & chip shops, small garages, etc.

At the moment, they are struggling to keep below the registration threshold - often they can only do so by opening fewer hours than they could. By opening fewer hours, they need staff for shorter hours, thus affecting the economy.

When I do the calculations, such businesses often need to raise their turnover from £65k to around £80k p.a. just to keep the same net profit. When more staff are needed for the extra hours, you can easily increase this point to £90k. So, for say a cafe that wants to increase its profits, it has to make a quantum leap from £65k turnover to around £90k turnover, otherwise it makes less profit. That is a massive disincentive to grow your business.

I even have one fish & chip shop client who regularly closes down completely for 3/4 weeks at least once a year, when he realises his turnover is getting too close to the threshold.

I'd love to see an increase in the threshold to £100k and agree with Elaine that it would be incredibly simple to introduce and make enormous benefits to the economy.

 

[Philip Hoyle]

I voted no, because the existing VAT threshold is already a big barrier to growth, and increasing it would increase the size of that barrier. If would simply be different businesses that have the problem.

I'd disagree with that. It wouldn't be different businesses at all. At the moment, those with turnovers over £67K are already registered. Raising the threshold wouldn't affect them at all. The only ones that would be affected are those that are currently below the £67k threshold that initially benefit from the higher amount, but then their turnover reaches the new threshold, so they have to register anyway - but they'd have already had to register under the existing rules. It would be a massive benefit to a large number of businesses with turnover between £67k and £100k. I have no idea how many businesses this would be, but I suspect it would be quite a lot.

 

[elaine@cheapaccounting]

I have several small business clients who would love an increase in the VAT threshold, particularly small cafes, fish & chip shops, small garages, etc.

At the moment, they are struggling to keep below the registration threshold - often they can only do so by opening fewer hours than they could. By opening fewer hours, they need staff for shorter hours, thus affecting the economy.

When I do the calculations, such businesses often need to raise their turnover from £65k to around £80k p.a. just to keep the same net profit. When more staff are needed for the extra hours, you can easily increase this point to £90k. So, for say a cafe that wants to increase its profits, it has to make a quantum leap from £65k turnover to around £90k turnover, otherwise it makes less profit. That is a massive disincentive to grow your business.

I even have one fish & chip shop client who regularly closes down completely for 3/4 weeks at least once a year, when he realises his turnover is getting too close to the threshold.

I'd love to see an increase in the threshold to £100k and agree with Elaine that it would be incredibly simple to introduce and make enormous benefits to the economy.

You star - you've explained it so well.

I also have a few clients like this. One is a small sandwich shop and going over the threshold is really worrying for them for exactly the reasons you are said.

If this petition gets going I hope I can rely on you to promote it around your clients.

 

hi I am about to go vat next april as my work is now more b2b but I think the vat rate should be cut to at least 15p this would help everyone who spends money .
vat is like a window tax just not fair

 

[estwig]

Elaine

Good on you for posting this and I will def sign when its approved

I wont say to much on an open forum but I am very careful with my invoicing to keep under the VAT threshold keeping a running 12 month check to make sure I am under it. Most of our work is with private domestics and we would have to go over it by a lot to break even which I am not confident that we can do at the moment / next few months.

Examples of being careful with invoicing includes not invoicing for materials directly (ie; bathroom suites) but just act as an introducer to the manufacturer/supplier and get profit another way (loyaly schemes, trade accounts etc). Also subcontractors now having whole jobs passed to them so they can invoice instead of us (negating cis too) and they just pay us a management fee/referral fee. Am also careful to time the invoicing of jobs so that the large ones are not in the same invoicing period.

It's quite a lot of faffing about but we are having to tread water at the moment so it would help us a lot if lifted to £100k

Would love to see the first £10k profits free from corp tax too or am I just being greedy Surely others would support that too

Max

Luv reading your posts Maxine, you do things so so differently from me but we are so similar in the way we generate work and what we do. We really should do business, I can generate far more work than I could ever possibly cope with, but don't know what to do with it.

I luv VAT it puts me above the cowboys, gotta think big, I large it up about VAT and couldn't wait to be registered.

I think the threashold should be lowered, really screw the cowboys.

 

[estwig]

Brilliant thread and some excellent contributions, but why don't people simply increase their marketing and expand.

It is fear of the unknown, outside the safety net and all that, this is what stops people, it has nothing to do with VAT thresholds and everything to do with your perception of what being in business is all about for you as an individual.

Maybe you don't want to expand, fair enough, but don't blame this on the HMRC and VAT threaholds, except the fact you are happy where you are and respect to you for it.

 

[maxine]

I luv VAT

OMG - Can't believe you just said that considering on your other post you put your fingers in your ears and went tra-la-la when someone suggested writing off your bad debts to avoid tax liability and then write it back on if you recover it

But you are right about growth planning etc. The reason I am hanging on at the moment is because of profit not because of turnover if that makes sense. We need a bit of a leg up so to speak to get over the initial VAT hurdle. That means finding a way to grow quite quickly but retain the same levels of profit. We have been putting it off and putting it off for over a year now trying to find a good time. Will prob do Q3 next year though as have plans for higher value work and marketing.

As someone else said with the fish & chip shop example we would need to work a lot harder to make profit after paying staff/subbies, materials etc so need to make a jump big enough to compensate for that. Perhaps I am talking out of my backside I don't know Maybe I am just operating from comfort zone but with cash as tight as it is I don't want to take a gamble without having the jobs line up in advance

Maybe you can give me some advice

As for your other work. Cant you just either Do it, Sub it or Sell it? but not walk away from it?

 

[adam]

Not wanting to miss a chance to knock the Government I am not sure this is one party against another.

I have always been VAT registered as I deal with other VAT registered companies. However you are right, the small vending operator or cafe owner that is below the threshold does get a bit of a raw deal at the theshold but this is the same as stamp duty when a house at £250,000 costs £2,500 in SD but one at £250,001 costs £7,500.03. That 1 pound has cost £5,000.03 extra.

Exactly the same as VAT. Let's say the threshold was £100,000. A cafe turning over £100,000 gets to "keep" £100,000 the cafe turning over £100,001 has to hand over as good as 15% of that to the VAT man. So at £100,000 that extra pounds has cost give or take the pennies £14,900!

Please do not correct me on the 15%, it is actually 14.89% but 15 is as close as you can get for a quick mental calc. If you think I mean 17.5% please speak to an accountant!

Good luck.

 

[themonk]

The difference between the current VAT level & increasing to £100,000 means that to increase it would give the small business a fighting chance to expand without causing hardships for him/herself & family!
As I have said in an earlier post, I'd have to currently turnover considerably more just to stand still, e.g. no real growth or benefit to myself.
An extra £30k before VAT would mean small but significant steps to making growth happen.
Surely this must mean a stronger economy for us all?

 

[David Griffiths]

I'd disagree with that. It wouldn't be different businesses at all. At the moment, those with turnovers over £67K are already registered. Raising the threshold wouldn't affect them at all. The only ones that would be affected are those that are currently below the £67k threshold that initially benefit from the higher amount, but then their turnover reaches the new threshold, so they have to register anyway - but they'd have already had to register under the existing rules. It would be a massive benefit to a large number of businesses with turnover between £67k and £100k. I have no idea how many businesses this would be, but I suspect it would be quite a lot.

And I'll disagree with you.

You seem to be saying that if somebody is currently VAT registered at the £67k threshold, and presumably deregisters if the threshold is raised to £100k, they won't be disadvantaged if they then grow and have to re-register?

What I am saying is that there will be businesses who are currently below the £67k threshold who see that as an impediment to growth.

If you increase the threshold to £100k, there will also be businesses trading just below that thresholod who will see that as an impediment to growth. They might be the same businesses that currently are just below £67k, but more likely they won't be - they will be different businesses, faced with the same problem - hence my comment.

To me it's irrelevant that they may currently be registered, but could de-register with the increase in threshold. When they approach the new one, the cost will increase from the need to generate an extra £13k in turnover to the need to generate an extra £17500 in sales.

It matters not a jot that they may be temporarily better off by de-registering. What counts is what happens when they reach the new threshold.

The higher the level that is set, the higher the cost of breaching it

 

[David Griffiths]

The difference between the current VAT level & increasing to £100,000 means that to increase it would give the small business a fighting chance to expand without causing hardships for him/herself & family!
As I have said in an earlier post, I'd have to currently turnover considerably more just to stand still, e.g. no real growth or benefit to myself.
An extra £30k before VAT would mean small but significant steps to making growth happen.
Surely this must mean a stronger economy for us all?

And reducing the level would mean that the cost of exceeding it is reduced, making it easier to drive your business forward without getting hung up about VAT, which places an artificial impediment in the way of growth.

If, for example, the limit was £10,000, then you'd only need to generate an extra £1,750 of turnover to stand still (assuming no input tax claim) whereas at £100,000 you need to generate ten times that amount - a much bigger hurdle to overcome.

 

[David Griffiths]

Absolutely and the problem with that is ????

I have been like that for 40 odd years - am unlikely to change now.

Your word, not mine!