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Old 24 October 2011, 12:35   #11
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I've had to go VAT reg this year and its a pain. I'm well over the threshold now as I thought in for a penny in for a pound and have increased my turnover to take account of the added costs.

Although I'm not a "busy business" in terms of daily work it's still a hassle in terms of paperwork.

As a sole trader - I've sold about 65 boats/outboards since going VAT in April and each one has a record. I'm hoping it's acceptable in accountancy terms but I refuse to pay the fees for them to do my returns. I've filed 2 VAT returns to date and they've both been ok. I'll get them audited at the end of each financial year so that will highlight any errors

If I could I'd jump at the chance to not be VAT reg but as the average boat sale is now around 8000 it's impossible to stay under that mark.

My advice is if you can avoid it (legally) do for as long as you can.

Buying the two new motors as a capital asset would only allow you to claim back up to 1,000 in the first year for tax. I'm not sure how the VAT works I assume you can get it all back in the first year.
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Old 24 October 2011, 13:07   #12
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If your turnover is less than 150,000 pa you may be able to register for the flat rate VAT scheme. You can still claim back the VAT seperately for capital purchases with have a VAT inclusive cost of over 2000. More info on; http: HM Revenue & Customs: Flat Rate Scheme for VAT

I use this scheme and my VAT return takes me about 20 minutes, although I do keep accurate books which helps.

Barry
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Old 24 October 2011, 13:57   #13
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The problem with flat rate for me is the value of each sale. it's great for low value sales. Also it's good if you have slot of Vat-able purchases. Mostly mine are private sellers so that's no good as there is no vat to reclaim

Flat rate on motor category (which is most suited to selling used boats) is around 8 or 12% on each sale price.

That's say 1,000 on a 10k sale which potentially only gave me say 1000 profit for arguments sake (not my figures just as an example). That means no profit.

I'm on the secondhand goods margin scheme so I pay 20% of my "margin" only. So if my same 10k sale yields 1,000 profit (again not my figures just easy example) that's only 200 VAT on the same sale. It has it's draw-backs though. For example if you buy a boat for 2,000 and spend 7,000 enhancing it with a new motor for example then sell it for 10,000 your margin is still 8,000 not the ,1000 profit you've actually made. The 7,000 you spent would have to be re-claimed via a separate VAT input assuming their is VAT to recover. If not you lose out on your margin.

My return takes no time either but im keeping good records too and seperating my input vat into sections which helps. Ive not been asked by HMRC to make them available for inspection yet but if they do im confident they can make sense of it all. They run free courses which I keep meaning to book onto just to see how better I could make it.

It's a minefield I tell ya. Avoid avoid aviod.

Peter ~ Boatsandoutboards4sale ~ askboatsandoutboards4sale@sky.com ~ 07930 421007
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Old 24 October 2011, 14:07   #14
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Ouch, that looks, as you say, like a minefield.

I'm very much in the service industry and the flat rate scheme works really well.

I think the key is keeping your books accurate and up to date allowing you to lay your hands on all the figures.

Good luck,

Barry
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