VAT

[Pudsey Bear]

Wish I wus elikwent and klevver like wot you ar David

But yeah that's what I was trying to get to.

 

[wildebus]

My first big co was vat reged, but not the tiny biz i run now, and no tax to pay if turnover under £16 grand.

In the real world, if you have a Business/Hobby/Whatever that has a turnover of under £1,000 (one thousand), you are not obliged to declare it on a tax return. Over that £1,000, you need to declare it on your self-assessment tax return, irrespective of any profit it does or does not make.
(I doubt if NI is different to other countries within the UK on that respect).

 

[wildebus]

Wish I wus elikwent and klevver like wot you ar David

But yeah that's what I was trying to get to.

It is a pain

I used to buy quite a bit of stuff from AliExpress to sell at festivals alongside my electricals. Bits & Pieces to draw the kids in (which then drew their parents in ).
Used to be good until they put on VAT on EVERYTHING. instantly, all costs went up at least 20%.
Some might say "just register for VAT" and get the 20% back. simples". But you have to add 20% to your selling price - and if your customers are in the main private buyers, they can't reclaim that extra 20% back, so they are less likely to buy at the higher price.
If you sell business to business, much simpler choice about VAT registration (assuming you are below the threshold where you get to choose of course).

 

[wildebus]

In general, Kev, a non VAT Registered Vendor is actually at an advantage, because there is no VAT chargeable on the sale! Go back to my £4 buy/£10 sell example, this cost a net £1 in VAT payable, so £9 gross profit less £3.33 net purchase cost = £5.67 net profit.

ONLY an advantage if selling to a buyer who cannot claim VAT back.
A buyer who can claim VAT back could be willing to buy elsewhere at a higher inclusive/gross price when it included VAT if the net price was less than yours.

If I am not VAT registered, I buy at £4 inc VAT which I cannot reclaim, and sell at £10, so my net profit is £6. Being VAT registered is only advantageous if you have lots of VAT offsettable expenses. The purpose of VAT is to produce Tax Revenues, so it has to yield more from the final sale than the underpinning purchases cost in VAT reclaims

The examples are very simplistic, just for illustration, and there are all sorts of nefarious manouevres that VAT fraudsters deploy to exploit the VAT Regulations, including one that involved importing phones via the EU, then [falsely] claiming to have exported them outside EU. I can't remember the full details, but phones were crossing Borders by the lorry load and the VAT fiddle was worth £ millions until it was discovered

Steve

 

[Pudsey Bear]

Liz's kids opened a small sandwich shop last year and it's doing quite well, they are getting a small wage each at last, but they have the additional hot food & cold food thing and eating in or eating out, a minefield of Gov red tape.

 

[marchie]

Liz's kids opened a small sandwich shop last year and it's doing quite well, they are getting a small wage each at last, but they have the additional hot food & cold food thing and eating in or eating out, a minefield of Gov red tape.

Some of us are still confused about whether VAT69 is an alcoholic drink or a topsy turvy tax ...

Steve

 

[Pudsey Bear]

Reg on my new Harley was P69 YUM