VAT Registration

[PlumbersMate]

When you become VAT Registered would you have to charge VAT when you are subbing to a firm on site?

Just weighing up the PROS & CONS

Thanks

 

[ecowarm]

Charging Vat to other VAT registered businesses is not a problem. they claim it back, its private customers who don't like it

 

[boblydon]

yes you would charge it on all sales invoices, as Ecowarm say's other VAT registered firms cliam it back anyway, I have always been VAT registered and cant see a downside to it.....well maybe a bit more paperwork, but thats what accountants are for!!

 

[tamz]

I have always been VAT registered and cant see a downside to it.....well maybe a bit more paperwork, but thats what accountants are for!!

Of course there is a downside if you are working for private individuals. You are 20% more expensive than a non vat person.

Say 2 guys price a job.
1st one not registered. Materials £1000 labour £1000 total £2000
Guy 2 vat registered materials £833.33 (vat claimed back) labour £1000 total £1833.33 + vat total £2199.99 (20% more expensive)
So you would have to take a £166 hit to do the job for the same cost. (833.33 + 833.33 = £1666.66 + vat = £2k)

 

[stevetheplumber]

Of course there is a downside if you are working for private individuals. You are 20% more expensive than a non vat person.

Say 2 guys price a job.
1st one not registered. Materials £1000 labour £1000 total £2000
Guy 2 vat registered materials £833.33 (vat claimed back) labour £1000 total £1833.33 + vat total £2199.99 (20% more expensive)
So you would have to take a £166 hit to do the job for the same cost. (833.33 + 833.33 = £1666.66 + vat = £2k)

set against that the vat registered trader reclaims the vat on the stuff that isnt directl chargeable to each job the van, power tools servicing ,pat testing,training and fuel for example
so his overheads will be less and as said if subbing or working for regitered customers his price will be less

 

[boblydon]

Your right in one respect, however you would only be more expensive on the labour VAT, the materials would include the VAT charged at the suppliers anyway.

What your not considering is the VAT you can claim back on fuel, tools, vans etc which is one hell of a lot over the year.

 

[Pipes83]

I've also been thinking of becoming VAT registered. Correct me if I'm wrong but if I'm fitting a boiler for a customer I would only charge 5% VAT as Heating products/services fall into the reduced VAT rate? Thanks.

 

[tamz]

If you are vat registered not only are you more expensive on the labour aspect but if you put any markup at all on materials you are paying vat on that too.
Yes you can claim vat back on any business expenses but that does not amount to a great deal compared to what it costs you (albeit indirectly).
I'd know i'd rather have the extra 40-50K in my pocket and pay the vat on fuel, PPE, tools, accountancy, or anything else that is claimable, even a van every couple of years or so but i have no choice.

To Pipes83.
Yes you can charge vat at 5% on certain energy saving items like trv's motorised valves timers etc but only if they are supplied as a separate item and not as part of a full install or other work.
You would need a Philadelphia lawyer to work it out so most just don't bother.
It is more straightforward for heatpumps and solar stuff.
There are schemes like the Corgi vat saver which allegedly save you a few quid but these are under investigation and review by the revenue as they think the schemes are illegal.