Invoice question (& Tax)

peterattheboro

peterattheboro

peterattheboro

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I'm a registered sole trader and I'm soon going to be dishing out some invoices.

I'm confused about the tax side of it.

Where you have your totals, I need to set it out like SUB-TOTAL, VAT, and TOTAL. Correct?

Also as a sole trader, I don't need to be VAT registered where I require a VAT number but obviously I still do my self assessment each year?

Cheers for clearing up any confusion :)
 
If you are not VAT registered you should not charge VAT. You need to register if your VAT taxable turnover is over £70000 for the tax year. There are some other reason when registering is mandatory - mainly if you trading to other countries. Of course you may register even if you under threshold

You will need to do a self assessment irrespective of VAT registration

http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm
 
Dependant on the nature of your business it may be in your best interests to register for vat, you can sometimes make money.
Get yourself a good bookkeeper if you do, they are cheap enough.
 
Ahh, I did register ages ago. Like 4 months ago but heard nothing back. I assumed that was all I needed to do because they haven't got back to me with any details. However I did get a confirmation email.
 
And they (HMRC) will expect you top pay them if you're registered. They do not normally send reminders just a letter after you've missed the deadline.

Ring HMRC, ask for the VAT people and discuss it with them, they can be quite nice ;)

Andi.
 
Yep, you need your VAT registration number on all invoices.

Here is what you need to show on all VAT invoices: HMRC Link

Also, bookmark http://www.hmrc.gov.uk/vat/ :)


Edit: "If you make retail sales and you make a sale of goods or services for £250 or less including VAT", you can use a simplified invoice HMRC Link 2. However, I'd recommend setting up a template for a full invoice (the first link) and then using that for everything.
 
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peterattheboro said:
Also as a sole trader, I don't need to be VAT registered where I require a VAT number but obviously I still do my self assessment each year?
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peterattheboro said:
Ahh, I did register ages ago. Like 4 months ago but heard nothing back. I assumed that was all I needed to do because they haven't got back to me with any details. However I did get a confirmation email.
Click to expand...

Did you definitely register for VAT and not self employment?

If you did register for VAT, why? Are you primarily business to business?
 
peterattheboro said:
Not mainly but I do offer my services to businesses if needed.
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The reason for this question is that if you're normally supplying customers, rather than businesses, then VAT is a cost to them. They can't get that back. Most businesses can recover VAT (depending on their trade).

If you don't have to register for VAT (turnover not high enough to be compulsory), it's often not worth doing this voluntarily as it just pushes up your prices with no benefit to you.

On the upside, you can probably reclaim your input VAT.
 
peterattheboro said:
Ok so to my initial question. I don't need to charge tax on the invoice and also don't need to put a tax number on because I don't have one?
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Possibly. But if you actually registered, you're registration should be effective from the beginning of the next month. I'd check with them that the registration isn't lost in the post or something, as they may be expecting returns from you.
 
mollymoo said:
Dependant on the nature of your business it may be in your best interests to register for vat, you can sometimes make money.
Get yourself a good bookkeeper if you do, they are cheap enough.
Click to expand...

Jambo said:
You probably shouldn't have registered for VAT then. Unless of course you are near the threshold.
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csmager said:
The reason for this question is that if you're normally supplying customers, rather than businesses, then VAT is a cost to them. They can't get that back. Most businesses can recover VAT (depending on their trade).

If you don't have to register for VAT (turnover not high enough to be compulsory), it's often not worth doing this voluntarily as it just pushes up your prices with no benefit to you.

On the upside, you can probably reclaim your input VAT.
Click to expand...

This is all true and the general rule of thumb is that if most of your services are supplied to the public (eg non vat registered) then you shouldn;t volunteer to be VAT registered as it just makes you charges higher and hence harder to compete with the opposition.

However, every business should be assessed on an individual basis as there are some very generous schemes available from HMRC such as the flat rate scheme.

My gf has very few costs so her vat reclaimed is low but the flat rate scheme with an extra 1% bonus for the first year means she can keep 11% of the VAT charged for herself. This alone makes her an extra £5000 per annum.

However, she mainly invoices businesses so increasing her invoices by VAT did not make any difference to her business.

So seek advice is the best advice. If you want to email me in trust then feel free (company accountant and ex H M Customs and Excise VAT)
 
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