VAT question

[alexwilliams]

hey,

I'm about to start my business online, But have a quick question. Do i have to charge my customers VAT?

I make around £2.50 each product (profit) and the product value is around £30. so total cost of product + fees for accepting payments with my merchant service comes in at about £27.50. Leaving me £2.50 profit.

Do i have to charge my customer Vat on top of the selling price (£26.70) Im not VAT registered and dont need to be until i hit £62,000. When i hit the limit and register for VAT do i need to pay the VAT on the products i sold before the £62,000 limit or just the products after? If i have to pay the VAT on the previous products before the 62,000 limit that would actually leave me in the minus!

[Indizine]

No you do not charge VAT as you are not VAT registered.

The threshold is now £68,000

You only charge VAT from the date you decide to go VAT registered and this is the date you inform HMRC.

[alexwilliams]

So i only need to start charging VAT when i go over £68,000 then? The TAX man wont make me pay for the VAT on the products before the £68,000?

I expect i will go over that limit in 7-8monhts after my site is launched.

[accountantpete]

You can chose a voluntary registration before getting to £68k- it may be worth it if your vatable overheads are high.Personally I'd see an accountant with your expected income/expenditure figures and get their advice.

[RawRob]

I make around £2.50 each product (profit) and the product value is around £30. so total cost of product + fees for accepting payments with my merchant service comes in at about £27.50. Leaving me £2.50 profit.

I'm no expert, but that doesn't sound like enough profit to me. You haven't said what the product is, but what if one breaks and a customer wants a refund?

Rob

[Indizine]

No, HMRC wont backtrack and charge you anything for VAT for previous sales.

[Saltire]

Maybe you should look at the charges on your Merchant Account and see if you can shave a percentage rate or reduce transaction charges of Debit Cards. That would help your GP ratio.

[allenb]

If you do wait until you reach the mandatory limit for chraging VAT I seem to think, from memory, that you start charging from the 1st day of the month after the month after the month in which you hit the limit. Eg if you hit the limit some time in January then you start charging from 1st March.

Can anybody confirm this?

[Indizine]

You would normally prepare yourself and the date in advance so for example if you are at 67,000 and you know sales are £1k a week average, you would register in time for that. The responsibility is on you time register in time. Im not sure about this date thing you mention allenb; perhaps Pete can confirm that.

[accountantpete]

You would normally prepare yourself and the date in advance so for example if you are at 67,000 and you know sales are £1k a week average, you would register in time for that. The responsibility is on you time register in time. Im not sure about this date thing you mention allenb; perhaps Pete can confirm that.

What did your last slave die from?

Just to clarify Allen - you are right although you can speed it up slightly if you answer yes to Q 15 -then it is that future date that registration starts from.