voluntary tax & couple of tax questions

[glennp]

Howdy there,

I would appreciate some advice on a couple of questions.

I am just about to start a partnership business running club events, booking DJ's and etc.

We wont be making much profit and I have read that I don't have to register for VAT if we earn less than £73,000 year in profit, but can register for to voluntarily pay tax. How much is this and is it worth doing, taking into consideration the following :

Ticket sales - Do we have to pay VAT on this ? Most of this will be paid out to DJ's and equipment hire so not much profit, if any !
Business expenses - buying mp3's, equipment etc - Can I claim back VAT on these ? Can I claim back VAT even though I am not making any profit ?
My DJ Fee - Do I need to add VAT to my DJ fee ?
If a DJ playing for me gives me an invoice with VAT on it, do I have to pay that if I don't have a VAT number ? If I pay that, do I claim that back?

I think voluntarily paying tax maybe better in the log run ??

Any advice appreciated

[section 44]

VAT isn't payable on profit. VAT is payable on the value of taxable supplies - broadly, turnover. You can recover the VAT that you pay to the exent that it is attributable to your taxable supplies.

[pjclar02]

Hello Glennp

As per Section44s response, you will be required to register for VAT if your sales reach £73,000, if your sales are lower than this amount you can voluntarily register for VAT and this may or may not be worth doing. You would have to work out the numbers.

If you vuluntarily register for VAT, you would need to add VAT on to your various sales activities which will inflate your prices by 20%. So you need to consider whether your customers would pay the additional price, or whether you would be happy to keep your prices as they are and absorb the 20% VAT cost yourselves.

You would need to charge VAT on all of your sales, providing they are standard rated supplies for VAT purposes.

You can then recover VAT on any expenses incurred, so if you buy equipment that includes VAT then you can claim this back. If your DJ has provided you with a valid VAT invoice with a VAT charge on it, then yes you have to pay it and yes you can claim it back if you are registered for VAT. However, if there is no VAT registration number on the invoice it is not a valid VAT invoice, and you should request another invoice with the VAT number.

For this type of business, I would probably come to the opposite conclusion to you, that it may not be worth your while voluntarily registering for VAT. However, without a full breakdown of the income and outgoings (specifically those that include VAT and those that don't) this is only a gut feel and it would be worth your while consulting an accountant.

Best wishes

Paul