VAT Question, please help

[caroline b]

Hi,
I run a small swim school and have been told that swimming lessons are vat exempt as I am teaching/tudoring. please can someone clarify this.

Also if these are vat exempt and I register with the vat man can I claim the vat back that I pay on the goods and equipment that I have to buy for my lessons? :?

any help is appreciated
caroline

 

[Alpha]

Having read through some of the vat manuals I think it is likely that your services are not exempt. It would be worth checking with HMRC and getting a specific ruling on it.

However if they are exempt and your total income is exempt then you will not be able to claim vat back on purchases either :cry:

If you have some exempt supplies then you may be partially exempt in which case you would be able to claim back a proportion of the vat on purchases.

The proportion in its simplest terms is the ratio of vatable turnover to total turnover.

 

[james.hill]

First let me say, in no way am I an expert on this.

You'll be VAT exempt as long as the turnover for your business is under a certain threshold (£60,000/year or thereabouts, but I could be wrong).

As for reclaiming VAT back on purchases, it's probably not worth it. You're a B2C business, and if you're vat registered you'll have to charge your customers vat. Assuming your business is profitable, you'll always be charging more VAT than you'll be reclaiming, so the net difference will be that you have to pay the govt VAT.

If you're just starting out and planning some big purchases, I'm not so sure what the best advice would be.

 

[Alpha]

As you said James you are certainly no expert.

You do not have to register for vat if your turnover is below £60000. That is completely different to being exempt!

 

[james.hill]

As you said James you are certainly no expert.

You do not have to register for vat if your turnover is below £60000. That is completely different to being exempt!

I *meant* the correct thing, just a shame I got the words wrong! *hangs head in shame* =p

 

[caroline b]

Hi
This has cleared a few things for me and at the moment i would not be vat register and as the vat I pay on equipment would not be worth talking about so I think i will stay unregistered until such times as i have to.
Cheers for help and if you wish to know anything abour swimming you know where to come
caroline

 

[winton50]

My advice is almost always to stay unregistered as long as you legally can.

unless the equipment you are buying is hugely expensive the claims you can make will not be offset by the extra hassle of registering let alone the vat you will have to pay on your takings.

good luck with the business