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For those of you who work on their own,what are your parameters for earning a decent living whilst remaining below VAT threshold ? The reason I ask is that I heard that if you had a turnover of over 40K then the HMRC got interested ?
I have seen a few posts here about various techniques but what is the general consensus on the pro’s and con’s
Re: Whats the General Consensus of this
I omitted to say that when I say HMRC I am refering to the VAT aspects
Re: Whats the General Consensus of this
You need to get with it. 😉
From HM Customs & Revenue.
When you must register for VAT
If you are in business, you must register for VAT if your turnover for the previous 12 months is above £67,000. This is known as the VAT registration threshold. It changes regularly, so you should regularly check your turnover against the current threshold.You must also register for VAT if:
you think your turnover may go over the threshold in the next 30 days
you take over a VAT registered business as a going concern
you are selling goods into the UK from another country in the EU and exceed the ‘distance selling threshold’ – see the section below on registration and international trading
you acquire goods from other countries in the EU totalling more than £67,000 in a year – see the section below on registration and international trading.I was vat registered for over 17 years, the raising of the threshold to a sensible level felt as though someone had lifted a great weight of my shoulders.
I would think that most sole traders in this business should be able to keep under £67,000 😉
Jim.
Re: Whats the General Consensus of this
I`d love to know how you do this. I am a sole trader and would have to hide about £50,000 to get below the VAT threshold. And even that wouldn`t let me de-register as the de-registration threshold is lower than £67,000.
I would say if you can stay not registered then it has some advantages but being registered has advantages too.
But I think this has been discussed at length in another thread.Re: Whats the General Consensus of this
I suppose anyone with a shop will have to be over the threshold just to break even but if you only do repairs and work on your own it should be easy enough to avoid the VAT monster. It’s not really a fair system though because tradesmen in London and other big cities have to charge more to recover parking costs etc and it pushes up their turnover figure. In 10 years of trading I have yet to pay for parking when on a job.
Re: Whats the General Consensus of this
Mm Interesting, I heard that if you are turning over more than £ 5080 Per Month then the VAT people would be on your back.
So if 67,0000 is the threshold for being registered that would leave a lot of scope for the man in the van scenario would it not ?
Surely the whole idea is to be able to trade, earn a decent living without the shackles of the VAT system to contend with. I wonder how many of you are working this idea sucessfully I would be interested to know plus of course along with any tips ! 😉
Re: Whats the General Consensus of this
bazza500 wrote:I`d love to know how you do this. I am a sole trader and would have to hide about £50,000 to get below the VAT threshold. And even that wouldn`t let me de-register as the de-registration threshold is lower than £67,000.
Do you have a shop, sell spares or new appliances bazza. I don’t do any of those things and never have.
If I had to account for ISE machines that I have ‘sold’ for my partner in crime ( possibly bad choice of phrase 🙂 ) Star Supplies and had actually sold them myself then I would estimate that my turnover would be up by around £40,000 per annum in the past two years.
However the operative word is turnover and not profit. I work entirely from home using a mid to large estate car, always have done.
To sell the ISE machines myself I would have to get a van, arrange for storage and be around to accept delivery, deliver and then dispose of the old appliances and go back to being vat registered. Taking everything into account including the length of time I have left in the business I decided against.
If you are turning over £117,000 per annum on service calls alone as a sole trader then I take my hat off to you. 8)
Jim.
Re: Whats the General Consensus of this
Jim, if you can make a living out of a turnover of less than £67K I will take my hat off to you.
Re: Whats the General Consensus of this
Low overheads, not spent a penny on advertising for over 25 years, very compact area, running an estate car means that I don’t have to pay for a van and a private car, little things but they all help to keep costs down.
Jim.
Re: Whats the General Consensus of this
iadom wrote:
If you are turning over £117,000 per annum on service calls alone as a sole trader then I take my hat off to you. 8)Jim.
I wish!!
Yes I have a shop and sell new appliances and spares. The profit on some spares is huge and basically money for nothing.I suppose it`s everyone to their own thinking but as you say in your post if you don`t have long left to work then no point even considering it.
Re: Whats the General Consensus of this
Talking about turnover and profit I have always wondered what the ratio should be for a successful business! Mines approx 50/50m, But I think someone on this forum once quoted the phrase’ Turnover= Vanity Profit = Sanity’. Which seemed very sensible to me.
Goose
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