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Don’t overpay your VAT!

Do I need register for VAT?

Getting registered for VAT might seem a bit daunting.

After all, its more money going to the government right?

In the UK, if your turnover is £82,000 or more you must register for VAT by law.

This means:

  • You will charge VAT on your invoices
  • You will be able to claim VAT back on your purchases
  • You must record/keep all Invoices and Sales
  • You must submit a VAT return online every Quarter

The Bespoke Clocks Company

Let’s say you are a business selling bespoke clocks.

You purchase clocks from a manufacturer and they charge you VAT, which you pay.

Your purchase price is 40 + VAT = £48.

For example’s sake, let’s say you sell clocks for £50 (without VAT) per clock across the range.

Your competitors charge £55 Including VAT across the range.

You don’t add VAT to your Invoices and your buyers are happy with your prices.

Your profit is £2.

Turnover Increase

Your business takes off because of your great price, and your taxable turnover reaches the £82,000 mark.

Now you need to charge 20% VAT on your sales, but you were £5 cheaper than your competition?

Let’s see what happens:

£50 + 20% = £60

You are now charging £60 for your clocks, and your competitors are cheaper than you.

Claiming on purchases

But hang on a second, we can also claim our VAT back on our purchases?

Yes we can! But let’s take a look at the figures in detail:

Purchase Cost = £40 plus £8 VAT = £48

Selling Price = £50 plus £10 VAT = £60

We bought our clocks at £48, and we claim back £8

We sell them for £60, but we pay HMRC £10

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The VAT Rule of Thumb

In our simple example, charging VAT made us less competitive in the marketplace for bespoke clocks.

The rule is as follows. If your business:

  • Sells to NON-VAT registered individuals, then it would not be beneficial to register
  • Sells to VAT registered individuals, if would be beneficial to register

Save your time!

As your business increases, the whole process of VAT becomes very time consuming.

We charge great prices for bookkeeping and VAT.

We deal with the entire process of VAT:

  • Registering your company for VAT (acting as your agent)
  • Performing all calculations of VAT owed and Due
  • Legally reducing your VAT liability
  • Submitting VAT Online every quarter
  • SMS Reminder Service every quarter so you don’t forget!
  • Planning your VAT going forward
  • Speaking to HMRC for any VAT issues
  • Your point of contact for VAT Investigations

Are you paying too much?

VAT becomes more complex when you are selling items that are exempt of Tax.

You may be paying more VAT than you need to.

If you are a small business you may be eligible for a new VAT Scheme.

This means you don’t pay 20% VAT to HMRC, but a lesser figure.

We can help to plan your VAT and the amount you pay.

We keep up to date with all VAT regulations and laws and we know exactly what to do to ensure HMRC only gets what is due to them.

The business support we’ve received has been invaluable to us. It’s nice to have an accountant on the same page as us businesswise, working with us during this period of growth.

– Asif Aziz, Director, Tropics Foods Ltd.


0113 2486019

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“Our packages will save you time and money allowing you to keep your focus on developing your business and reaching your full potential.”

– Asghar Chaudhry, Partner