VAT - to register or not

OK, presumably then they happen to be in a type of business where it is common. Would you like to expand a bit, just to convince us (well, me in particular) a bit more. I'm quite interested to see what things are commonly exempt.

Financial services, for starters.

Land and Property is probably the most common. Lots of businesses make exempt supplies without realising the implications.

Betting and gaming Notice 701/26 Some supplies connected with betting and gaming are exempt. Others are standard-rated.

Burial, cremation and commemoration of the dead Notice 701/32 Most supplies relating to burial or cremation are exempt, but there are important exceptions.

Charities Notice 701/1 Some supplies made by or to charities are zero-rated, some are reduced-rated, some are standard-rated and some exempt.

Clubs and associations Notice 701/5 This explains the effect of VAT law on supplies made by clubs and associations, and the scope of the exemption for bodies that have objects that are in the public domain and are of a trade union, political, religious, patriotic, philosophical, philanthropic or civic nature. If you run a youth club you also need Notice 701/35. This explains how far you can treat your supplies as exempt.

Competitions in sport and physical recreation Notice 701/45 Sport

Construction, land and accommodation (b) Land and buildings. This includes sales, leases, licences, rights over land, sporting and mineral rights and parking facilities. Many of these supplies are exempt (although you can choose to standard-rate some supplies of property which would otherwise be exempt by opting to tax); but some are zero-rated and some are standard-rated. If you are involved in property development or transactions in land or existing buildings you need Notice 742 and Notice 742A.

Culture Notice 701/47 This notice explains the scope of the exemptions for admission charges to cultural exhibitions and events and for associated fund-raising activities.

Derivatives and Terminal markets Notice 701/9 This tells you about the VAT treatment of transactions in commodity and financial derivatives and trading on certain commodity markets.

Education and vocational training Notice 701/30 This explains which supplies related to education are exempt and which are standard-rated.

Finance and Securities Notice 701/49 This explains which dealings in money, trading in securities and associated financial services are exempt and which are standard-rated.

Health Notices 701/31 and 701/57 Some supplies by health professions and institutions are exempt, some are zero-rated and some are standard-rated.

Insurance Notice 701/36 This notice explains which insurance services are exempt and which are outside the scope of VAT with or without input tax recovery.

Sport Notice 701/45 This notice explains the scope of the exemptions for sporting and physical education services and for entry fees for competitions in sport and physical recreation.

Works of art etc, disposals from stately homes Notice 701/12 This explains when disposals of works of art and other objects, including manuscripts, prints and scientific objects, are liable to VAT. It also covers the arrangements under which certain disposals, exempted from capital taxation, may be exempted from VAT.

Generally...

Do you think you could put a percentage to that..?

"Troy Steadman" wrote

I've never made a loss!

I was going to say something along the lines of "All traders always make ..." but some pedant would have pointed out that some occasionally go to the wall, which tends to be a consequence of making a loss. Not always of a *trading* loss, but sometimes.

So I thought I'd say "generally" to avoid being accused of exaggerating. And what do I get? Accused of inaggerating.

I just can't win, can I?

That's because you haven't done your accounts properly but don't worry losses are relieved. Hmmm my wife is looking a whole lot better at this time of night...

I was thinking more of how many traders' output tax exceeds their input tax. Or, put another way, how many returns are for payments rather than repayments. Which has very little to do with profit.

You might be surprised. Cashflow *is* an issue a lot of the time. Especially if you include those who have to account for output tax before their invoice has been paid.

We import machines from Switzerland and hence pay import VAT when they cross the border. We reclaim the input VAT. Sometimes they aren't sold in the same VAT period, or sometimes they are paid for by Charity funds, No VAT is charged and we make a repayment claim that quarter.

It was to a local 1 man haulage contractor who bought a new lorry for say £80,000 + vat. He got a HP agreement for the £80k but was depending on making a repayment claim for the £14k of VAT. Relying on collecting the truck on the 30th of the month. The HP company paid the truck dealer directly.

Unfortunately due to sickness at the truck dealers the truck was not invoiced out until the 3rd of the following month, in the next vat quarter thereby delaying his repayment claim by 3 months. His bank would not support him to the extent of an additional £14ks worth of borrowing. As a result he found himself in the clag.

DG

Generally.

Doesn't follow if they supply to charities.

For instance the National Lottery funded hundreds of millions of pounds worth of CT, MRI, etc scanners from the likes of Siemens and GE, and didn't pay VAT.

On a smaller scale our local Boy Scouts troup is a registered charity !

DG

There we are then, I hope Ronald will have the decency to apologise to me as fulsomely as Tim has apologised to him.

Mind you I reckon your haulage contractor was a fool, the VAT point is generally the Invoice date but not neccessarily, not in these circumstances. The day he took delivery is (arguably) a better tax point.

I would have included it on the Return, if the VAT man queried it (which he might well do knee-jekedly if there is a repayment) he'd have a pretty good chance of arguing his case and either way assuming he normally *pays* VAT he'd have saved his cash flow and saved his firm.

"Troy Steadman" wrote

You have no idea - do you?! ;-)

"Troy Steadman" wrote

You should have cooked your books to make it look like you've made losses which in fact you haven't. That's what "doing your accounts properly" means to the likes of him.

OK, not a common thing for the typical 'small business' to sell though is it.

wrote

OK, then - what do *you* consider to be "common" for a 'small business' to sell?

Things to other small businesses! :-)

Most sellers of financial services are surely banks and such and, as such, are almost inevitably large.

If I think about all the local small businesses I know they are almost universally either small scale manufacturers, small wholesalers, small shops or small sellers of services. Now the only ones I can see falling into the VAT exempt area are the sellers of services but if you then look at what they do (car repairs, web site design, etc.) they are all VAT'able supplies. Even my accountant who you might think is somewhere near selling financial services most certainly charges me VAT on all the work he does for me.

Yes, there *are* VAT exempt supplies but they are a tiny proportion of what most small businesses deal with.

Possible "small" businesses with no output tax :

1. Insurance/mortgage brokers/IFAs (exempt)
2. Greengrocers (zero rated)
3. Bakers (zero rated)

However, it may be that additional goods/services supplied by the business may be standard rated.

Be assured that I have the decency, I just lack the motivation to exercise it on this occasion. :-) I'm just not sure what you think I should be apologising for. For "sidestepping" your irrelevant comment about cashflow? Pah! But if it makes you feel any better, I'll happily downgrade "Cashflow is a red herring" to "Cashflow is generally a red herring".