VAT explanation

thematthewbrennan

thematthewbrennan

Member
I seek advice on VAT. Im about to register as self employed and wondering how paying VAT works. How long after self assesment do you have to pay it?
 
If you've done well enough to break through the VAT threshold you need to get yourself an accountant. I wouldn't even try to tackle VAt myself..... well I did once and ended up getting an accountant ;)
 
As I said in another post... VAT isn't complicated really - it's just a question of 'sums'. If you are buying a lot of VAT rated print for people, stationery, business cards etc. that you will be charged VAT on you are able to offset that against the VAT you charge on. For example: *You buy business cards at £45.00 inc VAT. You sell to your client at £63.00. If they are VAT registered there is no VAT on your bill to reclaim. To them the cards cost £63.00. I do the same but the client can off-set his VAT and therefore will see the bill as £52.50 - so I look cheaper. From my point of view I have paid £37.50 and off-set the VAT (therefore I pay the VATman the difference of £3.00).

It is worth talking to a good accountant!

*This is simplified!
 
To start with, don't bother VAT registering, you won't need to. But if you're going to, I'd suggest a flat rate scheme. That means you only pay 10% VAT on what you earn, but you can charge it out at 20%. BUT you can't claim anything back apart from IT equipment. Works great for me as I don't but a lot of stuff in. And the print charges get passed on anyway.

But as others have said, get an accountant.
 
I believe that on the flat rate scheme you can claim back VAT on anything business related over £2000, not necessarily just IT stuff (though generally new computer equipment is going to get you in that kind of price range anyway!)
 
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