VAT how do I avoid?

ErNciLator · 7 May 2008 at 19:14

OK guys, one for the more pioneering out there.

I am right to think; that if you are a company you dont have to pay VAT/or can claim it back?

If so, how's this work? Is what I buy gotta be for the company (obviously right?) but how do I get this status if this is right - or just a rumour?

Freeman · 7 May 2008 at 19:17

Register as a LTD company?

pduk · 7 May 2008 at 19:18

Your company needs to be VAT registered itself, which means you are obliged to charge VAT on all your sales. You may then offset the VAT you pay on goods and services against this, and indeed claim back VAT if your sales are less than your purchases.

You will have to fill in a VAT return every quarter, or go on to the "small business" arrangement with HMRC. You're best off looking at http://www.hmrc.gov.uk/vat/index.htm

Cheers

Paul.

Participant · 7 May 2008 at 19:20

ErNciLator said:
OK guys, one for the more pioneering out there.

I am right to think; that if you are a company you dont have to pay VAT/or can claim it back?

If so, how's this work? Is what I buy gotta be for the company (obviously right?) but how do I get this status if this is right - or just a rumour?

You apply and they check you out / interview you and stuff. If your annual revenue is greater than £67k you are obliged. If it is less you can apply.

lsg1r · 7 May 2008 at 20:32

I'm a sole trader who voluntarily signed up (my hardware for work is expensive). All I did was fill a form in and pay my bills every three months, claim back vat against any earnings (which as said have vat added) etc.

Personal/business earnings/expenses for tax purposes are taken from the vat free values. Its a bit more complicated if you're buying to sell stuff but on a service provider (like me) its all fairly simple.

Caged · 7 May 2008 at 20:34

Basically you won't have much/any success in registering yourself just to get cheap PC bits.

Beansprout · 7 May 2008 at 20:37

VAT + avoid in same sentence = bad mmkay

rubin1961 · 7 May 2008 at 21:04

if you can help it dont go vat reg.he is worse than the tax man

Jet · 7 May 2008 at 21:19

Beansprout said:
VAT + avoid in same sentence = bad mmkay

There's nowt wrong with avoiding VAT. Evading is a different matter.

mangobreeder · 7 May 2008 at 21:25

i work in tax

let me give you some advise

Incone/corporation tax, you can fiddle quite a bit

VAT - play it straight down the line, HMRC are *******

Biohazard · 7 May 2008 at 21:30

Jet said:
There's nowt wrong with avoiding VAT. Evading is a different matter.

Sorry, but you are not totally correct there.

There is a whole team dedicated to hunting down tax avoidance schemes.

Trying to close the tax gap. See here --> http://www.hmrc.gov.uk/research/measuring-tax-gap.pdf

"The scheme which was disclosed to HM Revenue & Customs (HMRC) under the disclosure regime in Finance Act 2004 and would have sought to artificially generate losses by buying and selling the right to dividends on shares.

Paymaster General, Dawn Primarolo said:

"The use of avoidance schemes such as this which get around the intention of Parliament is unacceptable and unfair to the majority of taxpayers who pay their fair share.

The disclosure regime has enabled HMRC to make real progress in understanding how these complex schemes work and to close the loopholes upon which they depend at the earliest opportunity.

If necessary we will not hesitate to move against similar schemes in the future." "

Tefal · 7 May 2008 at 21:31

Look at it this way, you're not the first person to think they could swindle this, you're not the smartest to ever try it. They already know all the ricks you'll try.

Biohazard · 7 May 2008 at 21:34

Tefal said:
Look at it this way, you're not the first person to think they could swindle this, you're not the smartest to ever try it. They already know all the ricks you'll try.

Truth.

Jet · 7 May 2008 at 22:16

Biohazard said:
Sorry, but you are not totally correct there.

Avoidance = legal

Evasion = illegal

That's all you need to know. It's obvious they will close loopholes that people use to avoid paying tax.

Beansprout · 7 May 2008 at 22:20

Jet said:
There's nowt wrong with avoiding VAT. Evading is a different matter.

You know what I mean

Stolly · 7 May 2008 at 22:31

I've joined the flat rate scheme where i invoice at 17.5% but only pay the HMRC 12.5% meaning the remaining 5% stays where it belongs ie in my grubby paws.

You need to have a ltd, and actually do business through it. You also need to pay for an accountant, unless you really want to do all the paperwork yourself. Personally i've got better things to do.

oweneades · 7 May 2008 at 22:42

ErNciLator said:
OK guys, one for the more pioneering out there.

I am right to think; that if you are a company you dont have to pay VAT/or can claim it back?

If so, how's this work? Is what I buy gotta be for the company (obviously right?) but how do I get this status if this is right - or just a rumour?

I think you are slightly confused.

Regardless of whether you are VAT registered or not you still have to pay VAT*. The difference being however that if you are registered you can claim back VAT on purchases relating to your business (example being if you were a carpenter you could claim back vat on tools required for the job). Of course if you are registered for VAT you also have to charge VAT on work you do and also complete monthly/quaterly VAT returns (This normally result in you paying the VAT owed to HMRC as generally your sales should be greater than your purchases, of course this extra VAT was never yours to begin with (its added on top of the price of the job) so in practice you arn't losing out however it never looks this way when you look at the return.

If you are not registered for VAT (you revenue is below the yearly threshold) then you don't charge VAT on the work you do, you don't need to complete a VAT return however you can't claim VAT back on anything you buy for your 'company'.

*This is true whether you are a sole trader, partnership, Limited Liability partnership (LLP), Limited Company (LTD) or public limited company (PLC).

Vonhelmet · 7 May 2008 at 23:19

Stolly said:
You need to have a ltd

No, you don't. An individual can be VAT registered.

OP: You clearly don't know anything about this. Go talk to an accountant. Don't be surprised if they charge you £100 to tell you that you can't do a damn thing to avoid VAT.

Stolly · 7 May 2008 at 23:23

vonhelmet said:
No, you don't. An individual can be VAT registered.

OP: You clearly don't know anything about this. Go talk to an accountant. Don't be surprised if they charge you £100 to tell you that you can't do a damn thing to avoid VAT.

You mean as a sole trader ? Didn't know that.

I don't suppose you mean some normal bloke who's employed in the normal way. Well, i suppose they could but what would be the point ?

Vonhelmet · 7 May 2008 at 23:30

Stolly said:
You mean as a sole trader ? Didn't know that.

Yeah, a sole trader can be VAT registered.

Stolly said:
I don't suppose you mean some normal bloke who's employed in the normal way. Well, i suppose they could but what would be the point ?

An employee could be VAT registered, but probably not in their capacity as an employee. Like you say, there'd be no point.

Self employed folk like consultants could be VAT registered though.