Our website uses cookies to enhance the visitor experience (what's a cookieCookies are small text files that are stored on your computer when you visit a website. They are mainly used as a way of improving the website functionalities or to provide more advanced statistical data.). Are you happy for us to use cookies during your visits?
Please note: continuing without making a choice equates to giving us your consent, which you can withdraw at any time via our cookies policy page.


How to Make Money out of the VAT Man!

Yes, this is true you can make money out of the VAT Man!

I know this sounds as distant as Leeds United being crowned Champions of Europe (eh, we would have been back in the 1975 Final against Bayern Munich but for some dodgy refereeing decisions), but yes, certain Businesses do make Profit out of the VAT Man!

The ones that can make money from the VAT Man, will have to have a net Turnover of less than £150,000 p.a . This improvement on the Bank balance is made by the use of the VAT Flat Rate Scheme, and it is fair to say that probably only 1 out of 10 eligible Businesses will benefit.

But, one of our Clients at JCL (Jones Cooper Limited) Accountants is easily £3,200 per year better off by implementing our advice and recommendations on this. Over a 10 year period, that would be £32,000, – enough for Leeds United to pay the weekly wages of a top striker, (hmm, I wonder if this is enough to entice Robin Van Persie from Man Utd, – probably need to offer a little bit more perhaps?).

But getting back to the VAT, under the VAT Flat Rate Scheme, the VAT registered Business continues to charge VAT on all its Taxable supplies, but instead of paying over to the VATman the output Vat charged, less the input VAT paid out, it merely pays an amount of VAT equal to the appropriate Flat Rate percentage of its turnover. This Flat Rate percentage is dependent upon which category the Business falls into, ( there are about 53 different categories – probably equivalent to the number of Loan players Leeds United used last season).

From an invoicing point of view, when the Business invoices its customers, it still shows and charges the normal VAT rate, but clearly it will not be paying of all this across to the VAT Man.

Ah, but there are some potentials pitfall and traps to be aware of when deciding whether to adopt the VAT Flate Rate scheme or not. It is wise that each Business is looked at on its own merits, and certainly at JCL (Jones Cooper Limited) Accountants, we look and review this VAT situation on every single Client we act for, big or small, to ascertain whether firstly, the Business is eligible, and secondly whether the Business can make money from the VAT Man. This Review applies to Clients either not currently on the scheme, and also to existing Clients using the Scheme. There is no obvious answer, but to just do the numbers!

If any Businesses out there would want us to briefly review their situation regarding the use of the Flat Rate scheme, then please contact us and we will be happy to quickly look at this for them, free of charge.

Rickey

Rickey Cooper FFA, FMAAT, ATT

JCL – Jones Cooper Limited

 

 

Leave a Reply


    • Follow us on LinkedIn
    • Follow us on Twitter
    • Foollow as on Facebook