I can’t see any reason why they can’t charge VAT
VAT rates on different goods and services
A list of goods and services showing which rates of VAT apply and which items are exempt or outside the scope of VAT.
Thanks DXX, It's not 'why they can't'. It's why should they unless compulsory. Re your pointer to the guide, I thought I had in in 744 and 741a. Free for aviation and lots of others. But nothing about labour. So, I suppose is Service defined as part of labour, as opposed to just supplying a commodity? Am sure we will know more before the weekend is out with so many sparkies and builders on here.
If the business' annual sales exceed the vat threshold of £85000 then they have to register for vat and charge vat on all their sales.
If they aren't vat registered then they don't and simply charge their parts at cost (including vat that they pay for the parts) plus their labour cost without vat.
This should make a non vat registered garage slightly cheaper
If they aren't vat registered then they don't and simply charge their parts at cost (including vat that they pay for the parts) plus their labour cost without vat.
This should make a non vat registered garage slightly cheaper
Great answer, have it now. I think. So sales at £85K of the goods, and then must charge VAT on the service / labour of those goods if the annual turnover is more than £85k after overheads. So a business with £200k a year income has £125 overheads, profit is on £75K yes! therefore no Vat.
Nope, lost it again, pre profit post profit, or just total monies through the business.
Nope, lost it again, pre profit post profit, or just total monies through the business.
VAT aside ultimately you can choose to go elsewhere if you get a better deal OR request a price match.
Given the potential for FU’s with a T6 the price isn’t necessarily the best reason for choosing a service provider.
I tend to think that a place with a plush office and a bunch of pen pushers is going to have higher overheads and therefore less money going to the mechanics.
If you pay peanuts…….
Given the potential for FU’s with a T6 the price isn’t necessarily the best reason for choosing a service provider.
I tend to think that a place with a plush office and a bunch of pen pushers is going to have higher overheads and therefore less money going to the mechanics.
If you pay peanuts…….
It’s just turnover, anything over 85k and you have to be vat registered
It’s only small companies and one man bands that are able to stay below the vat threshold
VAT threshold is £85,000 of sales, money taken. It has nothing to do with profit or loss.
Many small builders stay under the VAT threshold by getting the customers to pay their suppliers directly, then charging them for their labour only.
Many small builders stay under the VAT threshold by getting the customers to pay their suppliers directly, then charging them for their labour only.
No, VAT is on turnover, not profit! (So, VAT is on the £200k in your example!)
The company charges it out to customers at 20%, but the rate it pays HMRC is determined by the type of company it is eg nature of business
Common misconception... just because someone does not charge Vat, does not make them a cowboy!
Must be pretty hard to stay under the threshold being a mechanic even being a one man band.
For warranty you need to use a vat registered garage I believe.
If the business is VAT registered (highly unlikely a garage with premises and employee(s) won't be registered) then they will be charging you VAT regardless of what it is they're charging you for, in our case (plumbing and heating) we usually give a final price as you would get in a shop just so people know what they're paying.
Being VAT registered even if you are under the threshold can have it's advantages. When you price a job for a private individual, you say it's £100 plus VAT. The customer asks if you can do any thing for cash, you say "yes, I can knock the VAT off." You get the same amount of money, but it stays in your pocket and you forget to declare it on your tax return. This can only work on the labour side of things tho'. You can't buy materials, claim the VAT back, but not show them as being sold on. That would arouse suspicions.
This is all hearsay, from overheard conversations in the pub you understand.
This is all hearsay, from overheard conversations in the pub you understand.
I've overheard the exact same conversations, we must have been in the same pub as there can't be many tradesmen out there who would do that!?
HMRC are launching their own satellite just to watch plumbers vans, it’ll take the heat off the rest of us!
Until queried on the element of corporation tax, dividend tax, income tax and NI that would have come out of said £100, yet the “discount” of VAT to the customer is actually improving the margin for the supplier! So, conversation goes:
“Anything for cash?”
“Yes, knock off the VAT!”
“Ah, so you’d actually make more out of me this way! That’s not really giving me anything for cash! Do you want to look at that again or would it be best if we go through the books?”
“Suit yourself!”
“Well, if we go through the books I will have the warranty and all that good stuff, unless you think a better deal can be done?”
“No probs, whatever works for you!”
“Ok, I’ve given you two chances to look at this again. Basically, we could work together and we can both avoid the VAT but you get a bigger slice of the action! That tells me that you’ll stiff me at any opportunity and I’d have no comeback which isn’t really working together, is it?”
“What d’ya mean? I ain’t stiffing you, I’m doing you a favour knocking off the VAT for you!
“Yes, and knocking off the VAT for yourself! And the corporation Tax, and the NI, and the income tax….let me get a couple of other quotes!”
What’s the next line: “F**k off!”? “I didn’t look at it that way…how about £85?”
Because the punter’s fall back line is always “I’ll get a couple of other quotes!”
If the punter comes across like that, they should be encouraged to get other quotes, that way it IF they come back, you can always be too busy to do the job.
Trades can choose their customers too. It's not as if there's a shortage of work around.
Trades can choose their customers too. It's not as if there's a shortage of work around.
In all honesty my post above was just a joke it does us no real good to do jobs "for cash", I can't pay my trade accounts, rent, van, insurance, gas safe, advertising, staff or tax bills with cash and who has cash these days anyway? If we do everything above board and pay our dues I can sleep well knowing the money I've got left is rightfully mine.
I completely agree! And, yes, the brevity of typing on a phone makes the exchange sound arrogant, especially for the punter! I would have chosen the Foxtrot Oscar response! Invariably the trade sacks the customer, not the other way round, even if the customer thinks he “in charge”!!!
The real point I wanted to get across is that “knocking of VAT” alone isn’t equitable, so there are points of negotiation available. So, don’t just go losing VAT alone! The trader also has an issue as he can only lose cash privately - it is becoming increasingly difficult to lose cash through his business.
HMRC is winning the war against the “black market”….the only real remaining option is “mates rates”: I will give you a list of what to buy and where to buy (they’ll give you my discount) and I will provide my labour/skills for £xxx cash in hand.
Cleanest solution? Be above board all the way! Make money, pay tax and sleep easy at night!
HMRC are spinning up more and more special suits to go after the “small man”…..Dishy Rishi has to stick those leaves back on the money tree that he ripped off for the pandemic! The big boys can afford specialist lawyers and specialist accountants!
* soap box is free now!!!
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