VAT (individual is self employed and PAYE)


A

alan

My nephew is a self employed tradesman providing services to companies and
the public. He is VAT registered.
The public object to paying VAT when they can use a non-registered tradesman
instead so he becomes uncompetative especially because the VAT he recovers
is not a large percentage of his turnover.

If a limited company is set up, and he is not a director of it but on PAYE
as an employee of that company, the company can be VAT registered and do
business with other VAT registered firms. They will also have other
employees.

Can he also be self employed to do work for the public so that his turn-over
as a self employed person means he does not need to be VAT registered and so
become competitive in that market?

The work he does comes under the CIS system too, does this complicate any of
this?

What is the overall position or benefit I wonder?
Any views would be welcome, please.
 
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E

Edward Cowling

alan said:
My nephew is a self employed tradesman providing services to companies and
the public. He is VAT registered.
The public object to paying VAT when they can use a non-registered tradesman
instead so he becomes uncompetative especially because the VAT he recovers
is not a large percentage of his turnover.
This happened a lot during the Cable boom in the mid 90s. Those
that kept to the rules never got a level playing field, so the cowboys
did very well.
If a limited company is set up, and he is not a director of it but on PAYE
as an employee of that company, the company can be VAT registered and do
business with other VAT registered firms. They will also have other
employees.
The limited company could specialise in another area, but if it buys in all
the
Vatable supplies how does it pass them on to your Son ? via a VAT invoice
which defeats the object. HM Customs and excise are very hot on interco
invoicing in the construction industry.
What is the overall position or benefit I wonder?
Any views would be welcome, please.
Are there several specific areas your Son works in. i.e. Could bathroom
fitting be separated from Roofing ?
If so then he could keep his current sole trading entity for the larger
part of the business, as it's already VAT reg. Then he can set up a
separate
Ltd company for the smaller cash deals to the public which isn't VAT
registered.

I mention separate areas, because if he just splits the invoicing it could
be
seen as a way to avoid the VAT threshold.
 
D

Doug Ramage

alan said:
My nephew is a self employed tradesman providing services to companies and
the public. He is VAT registered.
The public object to paying VAT when they can use a non-registered tradesman
instead so he becomes uncompetative especially because the VAT he recovers
is not a large percentage of his turnover.

If a limited company is set up, and he is not a director of it but on PAYE
as an employee of that company, the company can be VAT registered and do
business with other VAT registered firms. They will also have other
employees.

Can he also be self employed to do work for the public so that his turn-over
as a self employed person means he does not need to be VAT registered and so
become competitive in that market?

The work he does comes under the CIS system too, does this complicate any of
this?

What is the overall position or benefit I wonder?
Any views would be welcome, please.
Is he over the registration limit just on the supply of labour? Or does he
supply goods/parts as well?
 
A

alan

Doug Ramage said:
and any

Is he over the registration limit just on the supply of labour? Or does he
supply goods/parts as well?
Doug:
He supplies both. The materials and the labour to fit them. The cost of
materials is about 1/3 to tatal sales. (Electrician employing two or three
others as well as himself)
 
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D

Doug Ramage

alan said:
Doug:
He supplies both. The materials and the labour to fit them. The cost of
materials is about 1/3 to tatal sales. (Electrician employing two or three
others as well as himself)
If that's the case, could not the materials be supplied direct to the client
with him as agent, and thus drop him below the registration limit? If he
adds a mark-up to the materials, he can adjust the labour rate to
compensate?
 

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