VAT Question for Non-VAT Registered Company


P

Paul

Hi there,

I've just set up a small web design business as a limited company (I'm
a one man band, doing this in my spare time as a 'glorified hobby'),
and as my earnings are going to be quite low to begin with (i.e. well
below the threshold where you have to become VAT registered), I've not
yet became VAT registered.

I've got my first client, and just wanted to ask a question about VAT -
as I'm not VAT registered, am I right in thinking that I should invoice
them for the agreed price of the work, and that's it? i.e. with no VAT
added? Or do I have to invoice them for £1,000 + VAT?

If I don't charge VAT, do I need to write anything else down on the
invoice to indicate that I'm not charging VAT?

Thanks for any advice,

Paul
 
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P

Paul

No if you're not VAT registered you must *not* invoice them for VAT. Your
invoice just says "Web design as per our quotation dated ..." £1000.

If you are mainly going to be working for VAT registered businesses it
might just be worth you registering voluntarily: business customers won't
really mind about paying, you can reclaim the VAT you pay out on hardware,
software, hosting, professional fees etc etc and it also arguably
increases your street cred
Thanks for clearing that up.

Yes, I think most companies I work with will be VAT registered anyway,
so it makes sense for me to do it myself. I was just told it was a
complete nightmare for a new business owner to keep track of and
account for, so have avoided it so far. Shame I wasn't VAT registered
for the £1,600 laptop I bought the other day...!

Thanks,

Paul
 
T

Tony Bryer

I've got my first client, and just wanted to ask a question about VAT -
as I'm not VAT registered, am I right in thinking that I should invoice
them for the agreed price of the work, and that's it? i.e. with no VAT
added? Or do I have to invoice them for £1,000 + VAT?
No if you're not VAT registered you must *not* invoice them for VAT. Your
invoice just says "Web design as per our quotation dated ..." £1000.

If you are mainly going to be working for VAT registered businesses it
might just be worth you registering voluntarily: business customers won't
really mind about paying, you can reclaim the VAT you pay out on hardware,
software, hosting, professional fees etc etc and it also arguably
increases your street cred
 
T

Troy Steadman

Thanks for clearing that up.

Yes, I think most companies I work with will be VAT registered anyway,
so it makes sense for me to do it myself. I was just told it was a
complete nightmare for a new business owner to keep track of and
account for, so have avoided it so far. Shame I wasn't VAT registered
for the £1,600 laptop I bought the other day...!
You can reclaim pre-registration VAT on this sort of Capital Item on
your first VAT return:

<QUOTE>

What you can reclaim from the period prior to VAT registration

If you keep hold of evidence such as any VAT invoices, you can
generally reclaim VAT on taxable goods and services paid for before
you registered for VAT. However, certain conditions must be met.

For goods that you purchased prior to registration:

they must have been supplied to you and your business
they must have been supplied no more than three years before
registration
you must still possess them
you must have records showing the quantity and date you obtained them.

For services that you purchased prior to registration:

they must have been supplied to you and your business
they must have been supplied no more than six months before
registration
they can't have been related to goods which you disposed of before
registration
you must have records showing a description and the date you received
them.

To learn more about keeping correct VAT invoices, see our guide on how
to Set up records and invoice correctly for VAT.

</QUOTE>


http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_InfoGuides&propertyType=document&id=HMCE_CL_001217

http://tinyurl.com/b4z93
 
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P

PaulS

You can reclaim pre-registration VAT on this sort of Capital Item on
your first VAT return:

<QUOTE>

What you can reclaim from the period prior to VAT registration

If you keep hold of evidence such as any VAT invoices, you can
generally reclaim VAT on taxable goods and services paid for before
you registered for VAT. However, certain conditions must be met.

For goods that you purchased prior to registration:

they must have been supplied to you and your business
they must have been supplied no more than three years before
registration
you must still possess them
you must have records showing the quantity and date you obtained them.

For services that you purchased prior to registration:

they must have been supplied to you and your business
they must have been supplied no more than six months before
registration
they can't have been related to goods which you disposed of before
registration
you must have records showing a description and the date you received
them.

To learn more about keeping correct VAT invoices, see our guide on how
to Set up records and invoice correctly for VAT.

</QUOTE>


http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal
?_nfpb=true&_pageLabel=pageVAT_InfoGuides&propertyType=document&id=
HMCE_CL_001217

http://tinyurl.com/b4z93
Thanks for that information and the link.

Paul
 

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