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Hello, I am not sure whether I need or should register…

Hello, I am not sure...
Hello,

I am not sure whether I need or should register for VAT; can you help me reach a decision?
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Answered in 5 minutes by:
4/11/2013
Sam
Sam, Accountant
Category: UK Tax
Satisfied Customers: 14,242
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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Hi

 

Thanks for your question

 

Could you advise further, what your trade is, and what your turnover is each year. Approx how much you suffer in VAT, and why you are unsure what to do.

 

Thanks

 

Sam

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Customer reply replied 5 years ago

Turnover is too soon to say

Hi

 

And what is your trade and on what expenses will you suffer VAT?

 

Thanks

 

Sam

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Customer reply replied 5 years ago

Its a training centre; i offer private courses for a fee and also run government funded course such as apprenticeships. I pay VAT on my monthly rent and on purchases made at the local wholesalers for the supply of goods for some of my courses.

Hi

 

Thanks for your response and the additional information.

 

As it sounds like you pay very little VAT at this time (as other than rents its really your time and expertise rather than goods supplied) and you will have to charge 20% on top of the fees you charge for VAT, it would seem you are creating a more complex position that perhaps is needed at this early trade time.

Will it make your prices less competitive, or are all the customers you supply to, VAT registered themselves, which would be less of an issue (as they can then claim in back via their own VAT position) but in the current climate might choose to take services elsewhere.

 

However, if based on how the first 3 months bring in, money wise, this is in excess of £19,000 then you by law are obliged to register (as you will then within 12 months exceed the £77,000 threshold)

 

But I would see how the next few months perform, whilst you are not obliged to register, by which time you have a better idea of

1) Turnover

2) Growth pattern of turnover

3) the type of customers who take up your services and whether they are mainly VAT registered concerns or non VAT regsitered individuals or small businesses with less than £77,000 turnover

 

Thanks

 

Sam

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Customer reply replied 5 years ago

i would like to claim back my VAT costs that were spent to set up the premises and training rooms and VAT on rent.


 


My clients are varied; some pay VAT and some don't, or can I register for VAT exemption.


 


 

Hi

 

My advise still stands, is it worth all the extra accountancy costs, the time of the additional admin, when you do not even know how much your turnover will be at this early stage.

And as your clients are varied, would they all still give you their business if you had an extra 20% added on.

 

If you sit and do the sums- you have to charge and collect an extra 20% on what you have made so far, from which you can deduct the VAT costs suffered, does this put you in a position of being owed VAT back or not.

This position will it just be for the first claim as you had additional expenditure on which VAT was suffered - but for the future the VAT you will collect will be far more than that which you suffer.

 

I do not understand your comment re VAT exemption?? You either become VAT registered or you dont (if you turnover is a rolling 12 month period is less than £77,000), and within the remit of considering VAT registration do you provide an exempt supply (in which case you cannot register for VAT)

 

Thanks

 

Sam

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Customer reply replied 5 years ago

training centres, government funded provision is exempt from VAT

Hi

 

I thought you offered private courses to private individuals and had an element of business: i.e when a charge is being made for the education provided

(although you did not specify what these were) If this is not the case then you cannot register for VAT and cannot claim back VAT suffered.

 

If you do offer a business element then you will have a partial exemption (on the income that is for the government funded) and on the VAT suffered then see link here that explains how to make the correct amount of claim for VAT suffered.

 

http://www.hmrc.gov.uk/vat/managing/reclaiming/partial-exemption.htm#2

 

But I still advise that you are best allowing the business to grow if you have a partial taxable supply for the reasons given.

 

Thanks

 

Sam

 

 

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Customer reply replied 5 years ago

hi, it seems complicated and do not entirely understand. I offer apprenticeships - as noted above, these are government funded courses. I also offer some private provision which are paid by individuals and or their employers. I have paid out roughly £5000 just on Vat so far and will continue to pay at least £320 a month on just VAT for rent.


VAT exemption certs seem complicated, but if I had one then would not need to pay VAT on the days that i have apprentices in..


So far I have paid out for more VAT than charged for, due to bulk of the work being with apprentices.. so what do I do?

Hi

 

Thanks for your response

 

It is complicated, and as the rent is an aspect that is a mixed use, you could only claim a proportion of it anyway, but without any figures of turnover, and what % of it relates to the business side of matters, my advise is not to do anything for now, until you can see how much of the work coming in relates to the exempt side of matters and what relates to the trade side of matters ( private provision to individuals and employers not related to the government funding)

 

Thanks

 

Sam

Sam
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