VAT...the biggest ripoff in this county

[RussianRouter]

specially when companies start adding it to the postage.

When VAT first hit us,it was for the product not a service,now they're finding other means to apply VAT.

Sods.

 

[BradNaylor]

I think you'll find that VAT is applied in the same way right across the EU - it is not unique to 'this country'.

VAT has always been charged on services ever since it was introduced in the early 1970s. In fact, nothing much has changed at all since then apart from the rate at which it is levied.

I wasn't aware that it was being charged on stolen hub caps, though! :wink:

 

[Max Power]

I can empathise with you RR. I will be ordering a new van shortly and as I'm not vat registered will be handing over about £3500 to the chancellor :evil:
But if the government didn't collect tax through this route they would have to use another way to collect it

 

[Mike.C]

Increased to 20% soon :twisted:

Cheers

Mike

 

[Dibs-h]

specially when companies start adding it to the postage.

When VAT first hit us,it was for the product not a service,now they're finding other means to apply VAT.

Sods.

If it's a courier then fine - but I wasn't aware that Royal did a ex VAT price and inc Vat price? I always thought they did 1 price. In which case - a company is charging VAT on something that isn't VAT'ble. Perhaps some soul can shed light on this.

Dibs

 

[RussianRouter]

I won't know the courier till the item arives Monday//Tuesday? but at £8 sounds deff like RM?

 

[Daven]

From HMRC "Postal services provided by the Post Office are exempt from VAT, but this exemption does not extend to similar services provided by other suppliers, even where this might be seen as being in direct competition with the Post Office. However, if any delivery charge you make to your own customers includes the cost of stamps you buy from the Post Office you may have to charge VAT on the whole amount including the cost of those stamps."

From growthbusiness.co.uk "Postage stamps are exempt from VAT. The exemption only relates to services supplied by the Post Office for the conveyance of postal packages. Charges for postage and packing made by suppliers are subject to VAT and that tax can be reclaimed where the goods are used for business purposes. Where no separate charge is made for packing and carriage the VAT treatment follows that of the goods. For example, where the goods are zero rated such as food the whole charge will be treated as zero rated. The situation is a little more complicated where postal services provided by the Post Office are treated as disbursements. This usually applies in the case of direct mailing services where someone supplies services as agent in dealing with his principal's mail. Where postage is treated as a disbursement (where the service is provided by the Post Office or operators licensed by Postcomm) and the disbursement is reimbursed by the client/customer, VAT is not chargeable."

Yawn

 

[matt]

I can empathise with you RR. I will be ordering a new van shortly and as I'm not vat registered will be handing over about £3500 to the chancellor :evil:
But if the government didn't collect tax through this route they would have to use another way to collect it

Am I missing something? If you're not paying tax from your earnings when why would you expect to not pay the VAT on purchases?

 

[Max Power]

Matt , I do pay tax on my earnings,its called income tax
When I am over the vat threshold it will be my customers who pay the vat element on my service.
As I said, if the government didn't raise revenue through vat they would have to collect it somewhere else

 

[Dibs-h]

From HMRC "you may have to charge VAT on the whole amount including the cost of those stamps."


Yawn

Bit like VAT on top of Fuel duty - methinks. Thieving little whatsits.

 

[Richard Findley]

Matt , I do pay tax on my earnings,its called income tax
When I am over the vat threshold it will be my customers who pay the vat element on my service.
As I said, if the government didn't raise revenue through vat they would have to collect it somewhere else

It's not companies that pay VAT/taxes, it's their customers!!!!

Richard

 

[Dibs-h]

It's not companies that pay VAT/taxes, it's their customers!!!!

Richard

But there is a cost to companies of being unpaid tax collectors - time, staff - VAT returns, etc.

 

[studders]

... unpaid tax collectors - time, staff - VAT returns,

Fines?

What's the deal with VAT on secondhand goods? Never really understood that one.

 

[Dibs-h]

... unpaid tax collectors - time, staff - VAT returns,

Fines?

What's the deal with VAT on secondhand goods? Never really understood that one.

Not sure, but I think if the Co selling them bought them new & reclaimed the VAT, I think they'd have to charge VAT when disposing of them. If the items themselves were zero rated for whatever reason - then on the disposal the same logic would follow.

As far as HMRC is concerned it's just another output - the fact that the goods are not new, wouldn't bother them too much.

 

[studders]

Ah right. Ta Dibs.
So not quite as I thought, that VAT was being charged several times over on the same item.

 

[BradNaylor]

When I am over the vat threshold it will be my customers who pay the vat element on my service

In theory yes, but it doesn't quite turn out that way.

Say you are a self employed cabinet maker with a turnover of £69k pa and deal exclusively with members of the public. You are below the VAT threshold and so do not charge VAT on your sales; conversely you cannot claim back VAT on your purchases and expenses.

If you are doing your job properly, when quoting for jobs you are getting the maximum price which the market will stand.


If you increase your turnover by £1000 and go over the VAT threshold you will have to register for VAT. You will then have to charge VAT on all your sales - you will also be able to claim back the VAT on your purchases and expenses.

Because however, you are already charging the maximum price that the market will stand, price resistance will be met if you try to add VAT to your current charges. As members of the public, your customers cannot claim back the VAT, and to them it just forms part of the overall price. What would inevitably happen is that most of the VAT charged would have to be absorbed by your margin.

In my own case I have calculated that VAT registration would cost me around £7000 per year! :shock:

It would actually be a lot cheaper for me to go on holiday for 3 months every year, thus limiting my turnover, rather than go over the VAT threshold! This is exactly what we intend doing once the mortgage is paid off and young Dan has left school in a few years time.

What's the deal with VAT on secondhand goods? Never really understood that one.

If you are VAT registered you have to charge VAT on everything you sell, including any second-hand equipment you dispose of.

If you are not registered you cannot charge VAT.

Whether or not any second hand equipment or goods have VAT charged on them or not is purely down to the VAT status of the vendor.

 

[Terry Smart]

Most of the points here have been covered and, from my understanding and compliance with VAT rules, the correct points have prevailed.

One small point to consider about companies who are non-VAT registered claiming that this makes their products cheaper...

A Non-VAT company buys materials and (one way or another) pays VAT on them. When they sell the items they double the price (if only!) and make their margin.
When they become VAT registered they buy an item and effectively pay less as they can claim back the VAT. Then they double the price to sell it but some of the money they have charged now has to be paid back to HMRC. The price to the end user doesn't change.
There's an obvious difference there in a straight-forward sales transaction (on a item they bought for £100 inc they'd have claimed back £14.89 and when selling it for £200 they would have to pay out £29.78 ) but their margin as a percentage has stayed the same and of course now they can claim back the VAT on other items not directly connected to the original item, such as petrol, stationery, office expenses, machinery costs etc.

I realise this is overly-simplistic and having edited it several times I can't really remember why I was making this point, but it's still valid!

Ultimately, as has been said, it is the consumer on the street who really bears the brunt of the cost as they cannot claim the money back.
and has also been said, businesses act as unpaid tax collectors.

 

[Dibs-h]

Whether or not any second hand equipment or goods have VAT charged on them or not is purely down to the VAT status of the vendor.

It's also down to whether the items are rated for VAT. If zero rated - you as a vendor can't charge VAT on them. Admittedly in this game - very slim.

Dibs

 

[matt]

And let's not forget mixed rate products while we're at it - just in case someone's selling pepper mills containing pepper corns or a lawn mower with fuel in it, etc, etc ,etc...

 

[Anonymous]

you only pay vat on your profit in simple terms.

biggest problem for us is domestic customers and the fact that you will have to charge them vat on your labour and profit so essentially you are 17.5% percent more expensive (not quite as you are only 17.5% more expensive on your labour and profit) than joe not vat registered blogs.