This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

VAT Threshold - Under or Over?

gvaugh1
Posts:6
Joined:Fri Dec 18, 2009 8:50 pm
VAT Threshold - Under or Over?

Postby gvaugh1 » Mon Apr 09, 2018 5:10 pm

Hello

I've looked for this question on the forum but cannot find it, but apologies if it is here somewhere!

Basically, I have a limited company that provides financial consultancy services. The turnover (invoices for services) is just tipping over the VAT limit now, but is likely to hover around £85K to £90K in the foreseeable future.

I cannot increase the price of my services by 20% for VAT as that would make me uncompetitive, plus I have a lot of existing clients on a fixed fee without VAT contract. So, if I have to register for VAT, it will effectively lower the income to the business by about 13% (on the flat rate scheme) as I will just have to charge a lower fee before adding VAT to it and swallow the cost myself rather than passing it on.

So in future, rather than invoices over 12 months totalling £85K to £90K they will total around £75K plus VAT. Does this mean I will have effectively dropped below the VAT threshold again? I'm confused by this, as without VAT I am above the threshold but once I add it on to my lower fee, I seem to drop below again? Am I looking at this the wrong way? I don't want to get into a cycle of registering and de-registering!

Many thanks indeed if anyone can explain what I should/have to do?

AdamS93
Posts:268
Joined:Tue Sep 26, 2017 6:28 pm

Re: VAT Threshold - Under or Over?

Postby AdamS93 » Mon Apr 09, 2018 5:55 pm

Yes, if your taxable turnover exceeds £85k in any 12 month period to need to register for VAT. If you have already breached this then it is to late. If you haven't then maybe have a holiday...

As you may or may not be aware, the government are looking to reduce the VAT threshold anyway, so using my crystal ball, you will required to register in the near future regardless in all likelihood.

les35
Posts:635
Joined:Wed Aug 06, 2008 3:09 pm

Re: VAT Threshold - Under or Over?

Postby les35 » Mon Apr 09, 2018 6:30 pm

I wonder if your 'financial' consultancy services are taxable or exempt?
Precisely what do you do?

gvaugh1
Posts:6
Joined:Fri Dec 18, 2009 8:50 pm

Re: VAT Threshold - Under or Over?

Postby gvaugh1 » Mon Apr 09, 2018 8:17 pm

Many thanks for your comments.
My work is certainly not VAT exempt unfortunately.
I guess I will just have to accept a drop in my income is unavoidable.


Return to “VAT & Excise Duties”