Tax Question?

farmerm · Nov 11, 2019

Rowland said:
Firewood costs more when it’s delivered further ?

It also costs more if you through in a free stacking service too

d williams · Nov 11, 2019

devonbrion1998 said:
Yes I would be cheaper, we both gross 1k, the only one losing is the private customer which cant claim the £200 vat back.
This has been my point the fencing ect we do is for the private owner, they would be salaried.
Going to go through the figures and see if I would gain from registering for vat,
If I do then that fencing job will have to be £800 plus vat, thus I'm down £200

????? Can’t make any sense of the hat

Muddyroads · Nov 11, 2019

devonbrion1998 said:
I think if I looked into it, some may well be, now you come to mention it

If you do look seriously at it, remember that you can claim the VAT back on capital items bought over the previous 4 years. This was a nice little bonus when I did it a few years ago. Presumably you currently trade under the VAT threshold?

renewablejohn · Nov 11, 2019

Rowland said:
I think your answering your own questions. If I were you I’d be heading to the accountant to go vat registered. Also I’d be asking why they hadn’t recommended you to become registered.

Probably because they have there heads screwed on and you stay below the 85k threshold set up as a share farming operation with a commercial woodland. No income tax No VAT what could be easier.

neilo · Nov 11, 2019

Lincsman said:
No, Its the person thats VAT reg not the business, otherwise everyone would be trading between their own businesses to avoid tax.

Ok, so his OP takes on the firewood business then.....

renewablejohn · Nov 11, 2019

neilo said:
Ok, so his OP takes on the firewood business then.....

Thats how we run it. The wife runs the farm and I share farm the woodland side.

ARW · Nov 12, 2019

devonbrion1998 said:
Yes I would be cheaper, we both gross 1k, the only one losing is the private customer which cant claim the £200 vat back.
This has been my point the fencing ect we do is for the private owner, they would be salaried.
Going to go through the figures and see if I would gain from registering for vat,
If I do then that fencing job will have to be £800 plus vat, thus I'm down £200

If the job costs 1k it costs 1k, if I quote for it £1k plus the vat and you quote for it ex vat then you may get the job, but that’s to the benefit of the customer but does it benefit you?

renewablejohn · Nov 12, 2019

ARW said:
If the job costs 1k it costs 1k, if I quote for it £1k plus the vat and you quote for it ex vat then you may get the job, but that’s to the benefit of the customer but does it benefit you?

Of course it benefits you as you have the job and dont have to apply vat so long as your not vat registered and trading below the 85k threshold. So in the case of logs if all your customers are not VAT registered which is normally the case then a non vat registered business has a 5% advantage over a vat registered.

Lincsman · Nov 12, 2019

renewablejohn said:
Of course it benefits you as you have the job and dont have to apply vat so long as your not vat registered and trading below the 85k threshold. So in the case of logs if all your customers are not VAT registered which is normally the case then a non vat registered business has a 5% advantage over a vat registered.

Not a 5% advantage, the person VAT reg has a reduced fuel cost along with other things, the chainsaw is 20% cheaper, and possibly the pick up delivering it.

As its only 5% on logs being VAT reg might actually make you more competitive.

Lincsman · Nov 12, 2019

Chasingmytail said:
5% on delivery no VAT if collected as per accountant. Therefore a lot of people collect firewood here.

If that were true every oil fired home owner would have a bowser to collect from a Certas depot!

renewablejohn · Nov 12, 2019

Lincsman said:
Not a 5% advantage, the person VAT reg has a reduced fuel cost along with other things, the chainsaw is 20% cheaper, and possibly the pick up delivering it.

As its only 5% on logs being VAT reg might actually make you more competitive.

Really. 80k log sales @ 5% 4k Chainsaw 300 @ 20% 60 quid fuel cost zero (electric)

Extra 4k for doing nothing equivalent to processing additional 40 m3 of logs. Think I will stick with my income tax free and vat free model as it works well for me.

Highland Mule · Nov 12, 2019

renewablejohn said:
Really. 80k log sales @ 5% 4k Chainsaw 300 @ 20% 60 quid fuel cost zero (electric)

Extra 4k for doing nothing equivalent to processing additional 40 m3 of logs. Think I will stick with my income tax free and vat free model as it works well for me.

Are those really the only costs you have? What about the raw materials, or does it just grow on trees .......

Struggling to see how you're income tax free without some additional accounted for costs.

renewablejohn · Nov 12, 2019

Highland Mule said:
Are those really the only costs you have? What about the raw materials, or does it just grow on trees ....... Struggling to see how you're income tax free without some additional accounted for costs.

Look up the rules on Commercial woodland then you will realise why it is income tax free and yes the raw materials do just grow on trees. Major cost is tea bags as I get through quite a few cups in a day.

Rowland · Nov 12, 2019

Lincsman said:
Not a 5% advantage, the person VAT reg has a reduced fuel cost along with other things, the chainsaw is 20% cheaper, and possibly the pick up delivering it.

As its only 5% on logs being VAT reg might actually make you more competitive.

It also made my delivery Vehicle , Processor, Tractor that drives the Processor, loader to move timber around, the timber it’s self, tyres for the vehicle, seat covers , air compressor, fuel tank for the tractor and loader the fuel for the loader tractor office furniture and equipment phone computer website, all manor of things at ,some reduced rates, for repairs to farm house . The list is endless Virtually all at a less cost than someone who isn’t vat registered.
The benefits in my opinion out weigh the disadvantages .

Rowland · Nov 12, 2019

farmerm said:
It also costs more if you through in a free stacking service too

What is this strange thing that you speak of

Tubbylew · Nov 12, 2019

ARW said:
If the job costs 1k it costs 1k, if I quote for it £1k plus the vat and you quote for it ex vat then you may get the job, but that’s to the benefit of the customer but does it benefit you?

IIRC a local plumber is quite selective with his work, so he stays below the threshold, makes him 20% cheaper than the competition automatically, customer buys the materials directly but he can't claim on his tools and equipment, which wouldn't be a great loss compared to fencing kit.

anzani · Nov 12, 2019

Rowland said:
Firewood costs more when it’s delivered further ?

I think HMRC would say that the 'delivery extra cost' would be chargeable @ 20%
Also, for any future registration to enable you to charge VAT on your supplies, you should be able to reclaim all the VAT paid in establishing the business, on equipment, stocks, and advertising, etc , subject to having the invoices entered in your business accounts.

Rowland · Nov 12, 2019

anzani said:
I think HMRC would say that the 'delivery extra cost' would be chargeable @ 20%
Also, for any future registration to enable you to charge VAT on your supplies, you should be able to reclaim all the VAT paid in establishing the business, on equipment, stocks, and advertising, etc , subject to having the invoices entered in your business accounts.

It’s tongue in cheek!
I never charge for delivery!

renewablejohn · Nov 12, 2019

Rowland said:
It also made my delivery Vehicle , Processor, Tractor that drives the Processor, loader to move timber around, the timber it’s self, tyres for the vehicle, seat covers , air compressor, fuel tank for the tractor and loader the fuel for the loader tractor office furniture and equipment phone computer website, all manor of things at ,some reduced rates, for repairs to farm house . The list is endless Virtually all at a less cost than someone who isn’t vat registered.
The benefits in my opinion out weigh the disadvantages .

I am pleased people have this mind set as it makes it so much easier to undercut them on price and achieve a higher profit margin.

renewablejohn · Nov 12, 2019

Tubbylew said:
IIRC a local plumber is quite selective with his work, so he stays below the threshold, makes him 20% cheaper than the competition automatically, customer buys the materials directly but he can't claim on his tools and equipment, which wouldn't be a great loss compared to fencing kit.

But if your fencing customers are mainly Vat registered then there is no point not to be Vat registered as they can claim the Vat back and you cannot be undercut by a non vat registered person.

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