stilover

Me too. Where abouts in Co. Durham are you?

Kev_turbo

Utter bollocks

Bloke A (not vat registered) charges £200 a day for gardening, he has to pay for all his kit and fuels at full (+vat rate).

Bloke B (vat registered) charges £200+ vat a day for gardening, he buys the same kit and fuels. At the end of the quarter he has to pay the £35 a day he collected in VAT to the tax man but also submits a claim for the vat he paid on all his fuels and kit and hence gets a portion of that £35 a day back. He has in effect made more than the £200 a day.

A rather sweeping statement that. I am self employed (tree surgeon) working part time mainly in the domestic market. I turn over less than £65k per year therefore do not need to be vat registered. I do not evade my taxes!!!!

Speak sense of sod off else where

Klaatu

VAT is a consumption tax, and in a way, is a fairer tax. At least in the UK VAT is applied to certain items, unlike NZ where, GST, VAT's equivalent, is applied to everything.

Buy sanitary towles, pay GST. Buy apples, pay GST. Buy a hot takeaway, pay GST. Pay your power/phone bill, pay GST. And you pay tax and GST on your savings too!

Klaatu

Yes, BUT, bloke B is an unpaid tax collector for gubmint. And what is "bloke B's" time worth doing VAT returns?

I did VAT returns in the UK, I didn't get paid for it. I did GST returns in NZ and didn't get paid for it. Would you enjoy being an unpaid tax collector?

Luminous

iTrader: (3)

Bishop, if I remember you are in Darlo

Devildog

Kev,

You are over simplifying things.

What happens in reality is that bloke A who is not vat registered charges £200 a day, and buys his tools (where possible) from a non vat registered seller. Yes, some of his supplies are plus VAT, but not all.

Bloke B who is VAT registered absorbs some, if not all of the VAT to be competitive, so he may also charge £200 a day (inclusive of VAT) of which he is entitled to £170. However he does have the benefit of recovering the VAT element of all of his supplies to which VAT is charged so his expenditure is less than bloke A, however assuming he is making a profit, the VAT recovered on his outlays will be less than the VAT element of what he is charging, and so he may well be less well off.

Whether you're better off being VAT registered or not depends on a myriad of variables and its not as straightforward as both of you have pointed out where the comparison is between to traders where one is just above and one just below the VAT threshhold.

I know many sole traders who are largely a service provider who operate just below the threshhold for the reasons given in my example. the upside of recovering the VAT on expenditure just isn't enough to cover the downside of competing with non vat registered traders.

Luminous

iTrader: (3)

The flaw in your argument is that in a domestic market what people care about is how much it costs them. Therefore Bloke A and Bloke B would be charging different prices. Bloke B Vat registered's £200 is actually £235 to the customer. If the customer is prepared to pay this much (£235), then bloke A could charge £235 too.

Therefore even though Bloke B manages to get some of his cash back by reclaiming VAT he is still out of pocket compared to Bloke A.

Where it pays to be VAT registered is if you sell to businesses. They don't care about the VAT as they can reclaim it. So its effectively a non-charge to them. However, if YOU are not VAT registered then you cannot reclaim anything on your purchases. This would make your example become valid.

r32

It was bound to happen, who ever got in .....
Sadly its quite logical.

Aztec Performance Ltd

iTrader: (234)

My statement was for businesses supplying physical goods. It doesn't apply to service related businesses, so relax.

Prices to the end customer (unless b2b) must include VAT, so if your VAT registered competitor is charging the same as you, he will actually be pocketing less. If his prices are 17.5% higher than yours, then his is less competitive.

Either way, a VAT registered business supplying goods/services to the general public will always be worse off than a business not VAT registered

We have to compete with people on this forum who aren't VAT registered but clearly sell more than the VAT threshold based on daily sales (ie more than £200). It is nothing less than blatant tax/vat evasion, robbing the public purse.

Klaatu

Don't see why anyone should pay 17.5% to a gubmint to get grass cut. I'll take the "cash" option.

David Lock

In reality many gardeners will be paid in cash and there will be no official record kept. Unless you are a Tory MP the customer is unlikely to want a VAT receipt. The gardener might also still claim back VAT, illegally, for tools purchased.

I am not in the gardening business btw. dl

SamUK

iTrader: (1)

Was watching the news, the repoter goes to I think a mp..

Vat rise of 25% is that what the public are expecting, the guy replies back no 25% would have a huge impact on public spending etc..but we are expecting it to be 20%...

I spose 20% is better then 25%...but 17.5% is better then 20%

Klaatu

VAT is a comsumption tax in the UK. Change habits, tax revenues goes up, or go down. Raise your comsumption tax, people change habits. Revenue goes down, unless the rate changes.

billythekid

Woah I really started something here! I agree with bob etal my company supplies goods. Anyone who runs a reasonable size company will know exactly what I mean. It's very frustrating. The small competitors who pay no tax or vat etc damage the legitimate companies and the recession has made this much more prominent. The vat rise just makes these people more determined to carry on as they are. Hohum.

Mus

iTrader: (2)

I love how the tax goes up

&

most wages will remain the same due to financial climate???

EddScott

It is and it isn't. We are not VAT registered being an IFA practice so any purchases we make we can't claim the VAT back. However, when we charge fees we don't charge VAT (Yet).

You could argue that because we receive the full fee we are making more money but its a PITA to spend £4K on computer software and no way of getting the VAT back.

Hanley

What the hell is a 'gubmint'?

Leslie

This country has been living on an economic lie for 13 years, sooner or later it was all going to catch up and the bankers' recession has set it off in spades!

We have to accept that we are all going to have to pay for NL's gross incompetence and economic irresponsibility or face the country's complete bankruptcy, and no one would like that very much, thats assuming it can still be avoided!

Les

Snazy

Unfortunatly some are too blinkered to see that and just moan.
Its easy to compare really. Same as an individual with a huge credit rating. Goes out, gets 10 credit cards and a load of stuff on HP. Spends for 2 years, on card and all their income then suddenly takes a pay cut. Cant keep up repayments and suddenly life is bleak. Goes from 4 course meals each night, to shopping in Lidl and Aldi in a flash.

And lets face facts, everyone has done it or knows someone that has lol

pslewis

I posted that VAT was going up to 20% days ago ......................

Snazy

Well done, have a fish !
Was expected from last year if you look back. Dig a hole, it needs plugging, usually with something a little larger than you took out

Aztec Performance Ltd

iTrader: (234)

If everyone adopted that attitude, everything as we know it would collapse as the economy/country relies on taxes being collected.

A very 3rd world attitude.

Terminator X

iTrader: (7)

Eh, how does that work?! Are they operating illegally?

TX.

Klaatu

Everything as we know it relies on VAT!!! LMAO! How did "first world economies" survive before VAT/GST? Other forms of, mostly direct, taxes perhaps? All that has happended is the gubmint has reduced direct taxation then passed on the cost of collecting taxes to businesses and contractors etc by introducing indirect, consumption based, taxes like VAT (Assuming your turnover is above the threshold).

Aztec Performance Ltd

iTrader: (234)

Just for sake of clarity, are you saying you would rather pay someone less for a cash in hand job rather than on the books?

Klaatu

Given the taxes most people already pay (Unless you are rich or have a great accountant) on income, income from savings, stamp duty, inheritance tax, death tax, window tax, etc etc etc, I don't see why anyone should pay an additional 17.5% VAT to the gubmint when employing someone to cut grass (Using the example in this thread). Where has the gubmint "added value" that justifies the tax?

Devildog

Its not the government that adds the "value"

And its not value as in "desirability" either ....

Klaatu

*jesus - rolling my eyes* It's a tax, collected by individuals/businesses for gubmint, the cost of collection and administration is passed on to individuals/businesses. Given all the other taxes people, usually, pay, and given a choice, why would you pay an extra 17.5% for the same job? Who benefits from this transaction? The taxman!

Leslie

Well you would say that wouldn't you!

By the way, what did I say to you over two years ago, about the economy I mean?

Les

Bram

The only thing I have to say about VAT increase is that it may not deliver what they intend or it could cause more issues than it resolves

1. What if the consumer do not purchase goods with the hike or drop in consumption or say put of sale
2. What do they rise (Govt) to plug the shortfall in their sums that this rise woukld raise
3. What affect will it have on production/economic growth of UK goods so affected with a rise and drop in sales
4. If point 3 above does start it will cause more issues so needing more measures and more areas targeted to plug shortfall

This is what Brown was on about and to an extent Cable. The quick measure may damage long term revenue or reduce in production/trade so affecting up turn in economy. It is this that they need more than anything else to bring the country out of recession or we may fall into back into recession.

But the Euro may be a worse problem as it will cause the problem yet again through reduced exports to Europe our biggest market. So back on the merry go round of finding other areas to cut or raise.