Episode Transcript
Speaker 1 00:00:05 Hi guys. It's Steve from c t a Profit First Accountant. So I want to do a short video to cover the subject of v a t. So you may be a so trader, you may be self-employed, you may be a limited company, and you, uh, might not really understand v a t or you might have the question, which is quite a common question we see is should I register for v a t in my business? We're gonna cover the two types of registration. So there's voluntary registration and there's compulsory registration. A little bit about cta. So although you might see me online, you might see some of my videos. We're actually a team. So we're really a boutique firm of accountants. We've got over a dozen team members in the picture. You can see some of the local team members. We're actually based in Gloucestershire, but we serve clients a across the uk.
Speaker 1 00:00:50 We, we help with the whole, um, finance function of your business, but we're also profit first certified. So we, our specialty is how can you grow a business profitably, unsu, sustainably, um, and, and not stressfully as a business owner. Cuz if the margins are not there and the cash is not there, typically we see business owners become probably bi busy fool if I'm honest, trying to just chase the revenue and the moneys in and out. That's one of the big things we focus on. So the first thing is the v a t limit. So if you go above 85,000 pounds of sales, sales, revenue, income, same thing. Really turnover. So money in your bank, uh, before any deductions in any 12 month period. So it's not just your accounting year or your tax years, any 12 month period. Um, so if I was looking at that now, I would take it from the 1st of July to the end of June.
Speaker 1 00:01:42 So July 22 to June 23 cuz that's the latest 12 month period. I don't just say write my accounting year is to the end of March. You always do a role in 12 mep. So you always look back 12 meps, did I go above the 85,000 pound limit at any time? Um, if you did, you have to register for V A T. There are some other, um, reasons to register and there are some more specifics. You can find that on hm C'S website. Just Google when to register for V A T HMRC and you can have some more information from the website. So voluntary registrations, uh, if you don't have to register for vt. So if you haven't gone above that limit or there's no other reason to have sort of small exceptional reason to, to register for v a t for, for instance, one of them might be you an overseas business, which is slightly different.
Speaker 1 00:02:29 You, you possibly you can choose to register for V A t and in a nutshell to really simplify it, if your business to customer, so your, uh, business selling to the public, generally, no it's not worth it. You know, there are some exceptions but generally it's not worth it because you have to add that onto your ex to your sales and it's gonna cost more for the customer. They cannot claim that v a t buck. If your business to business and your customers are that registered businesses themselves. So they're like bigger businesses, then they can claim back the V 18 and it's not so much of a problem. Um, I've just give a little bit of an example at the bottom. If you're a pizza shop and your pizzas were 10 pounds, uh, not that registered, then the pizza owner keeps 10 pounds in their pocket essentially.
Speaker 1 00:03:15 Obviously they've got costs, but let's just ignore all of that. We're just talking about that. So none of that 10 pound gets paid to the VAT man if they are VAT registered, then outta the 10 pound if they still sell their pizza for the same price. Cause presumably that's what the market says your pizza's worth. If you are already selling it for 10 pounds, you only keep eight pound 33 because eight pound 33 plus 20% comes back to the 10 pounds. Uh, hopefully that makes sense. So if your business to customer, it's not so business to customer is not worth voluntary. Register for v a t If you have to register for vt, that's a different proposition. It's something you need to manage because if your business is gonna grow, you could just have to deal with V A T. But if you're business to business, you can probably register earlier and you can recharge the V A T And why would you want to do that?
Speaker 1 00:04:05 The benefit in, in doing that is you can then claim back the v a t on your own expenses. And you might be thinking if you, if you, um, you don't need to retro v a t then everybody should do that. But the problem is your income is always gonna be more than your expenses if you've got a good business. So for a business to customer, the maths just don't work out because you're gonna pay more v a t, um, than what you're claiming. Your, you're just worse off. But if your business to business is different because you can add the VAT on as an extra expense and your overall, you, you are better off cuz you're basically getting the VA back on your,
Speaker 1 00:04:42 Okay. So if you want to know how v a t work, you want to know, um, you think VT is relevant for you, you think you might need to register, then let me know. And we can also cover how to actually do a VAT return. You know, what does it look like? What do the maths look like? What can you claim that on? What do you pay v a t on? What are the timescales? How do you pay the VAT across? We can cover all of those subjects. Just reach out, give me a comment and let me know. Um, or, or drop me an email and that's a, a topic we can cover later on for you. And also in the meantime, if you want to book a meeting to cover this with myself or the team, you've got any questions on vt, just gimme a shout. Thanks.
