# VAT reg'd company



## David (Apr 6, 2006)

At the moment i am a sole trader and not VAT Registered.

I am in the middle of trying to set up another company, but for it to work i will need to be charging VAT as it is purely business > business sales and all the companies will reclaim VAT.

What i need to know is can i have 1 company not charging and 1 company charging VAT or does it need to be both the same - either charging or not charging vat

the businesses will have different names& different bank accounts but they will be owned and run by me 100%

Thanks...if it makes sense


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## DMH-01 (Mar 29, 2011)

Are both companies in the same industry or different?


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## David (Apr 6, 2006)

both automotive, one deals with cars one will be dealing with fleet HGVs etc


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## dcj (Apr 17, 2009)

Unless its changed now my accountant told me a few years ago that its the person who is VAT registered and not the company. If thats the case then both companies would have to be registered for VAT. 
Unless you had a relative down as owning one of the companies?


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## David (Apr 6, 2006)

dcj said:


> Unless its changed now my accountant told me a few years ago that its the person who is VAT registered and not the company. If thats the case then both companies would have to be registered for VAT.
> Unless you had a relative down as owning one of the companies?


thats what i was thinking too - i've sent an email to my accountant so they should be able to tell me on tuesday.

cheers


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## centenary (Sep 5, 2010)

David said:


> At the moment i am a sole trader and not VAT Registered.
> 
> I am in the middle of trying to set up another company, but for it to work i will need to be charging VAT as it is purely business > business sales and all the companies will reclaim VAT.
> 
> ...


Unless your T\O is 73k or over, you dont have to register for VAT. So, if one company T\O's 73k+ and the other doesnt, even if they both work in the same sector, you only have to register the one that has the 73k+ T\O.

So, to answer your question, no you dont have to register both companies for VAT.


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## centenary (Sep 5, 2010)

dcj said:


> Unless its changed now my accountant told me a few years ago that its the person who is VAT registered and not the company. If thats the case then both companies would have to be registered for VAT.
> Unless you had a relative down as owning one of the companies?


Change your accountant quick! That's rubbish and never been the case. Its the company T\O that triggers regulatory VAT registration.


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## David (Apr 6, 2006)

thanks centenary, input appreciated


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## ianFRST (Sep 19, 2006)

perfectly fine to have 1 non vat, and 1 vat.


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## justina3 (Jan 11, 2008)

Centenary is spot on imo, you could always volunteer to register for vat also but god only knows why you would want to unless your going to spend a fortune on equipment in the coming year even then in the long run you will always end up out of pocket if you can get away under the threshold that’s what I would aim for.


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## DMH-01 (Mar 29, 2011)

justina3 said:


> you could always volunteer to register for vat also but god only knows why you would want to unless your going to spend a fortune on equipment in the coming year even then in the long run you will always end up out of pocket


Wrong, there's a few reasons why registering early can be of benefit.

As already mentioned you can have the one company VAT registered and the other not.


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## David (Apr 6, 2006)

justina3 said:


> Centenary is spot on imo, you could always volunteer to register for vat also but god only knows why you would want to unless your going to spend a fortune on equipment in the coming year even then in the long run you will always end up out of pocket if you can get away under the threshold that's what I would aim for.


the reason one might be going to be charging VAT is its to do with me dealing with certain companies - and in order to get some contracts they are wanting to reclaim the VAT element from the invoice, its not through turn-over (yet) but if i get enough work, i reckon it wouldnt take a few years before i hit the 68-70k margin to be honest (turnover not profit btw)


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## ianFRST (Sep 19, 2006)

you had a price from your accountant for doing a VAT return?

serious ££ compared to a sole trader tax return :lol: best of luck with the contract


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## David (Apr 6, 2006)

ianFRST said:


> you had a price from your accountant for doing a VAT return?
> 
> serious ££ compared to a sole trader tax return :lol: best of luck with the contract


i havent Ian, but if i need one then it needs to be done - accountants fees just come off the tax bill anyway :thumb:

Cheers, like i say - i wouldnt be going down the VAT route unless i had to in order to gain credibility and contracts in this sector


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## organgrinder (Jan 20, 2008)

You can be a sole trader, not registered for VAT and also have a limited company registered for VAT without any problem (because they are different legal entities).

Two sets of books though and Ltd Co's cost about double a sole trader to produce accounts in the £500 to £1000 bracket with the difference reducing in percentage terms as the figures get bigger.


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## justina3 (Jan 11, 2008)

DMH-01 said:


> Wrong, there's a few reasons why registering early can be of benefit.
> 
> As already mentioned you can have the one company VAT registered and the other not.


I would be interested to hear what the other reasons would be.


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## Rob_Quads (Jul 17, 2006)

David said:


> the reason one might be going to be charging VAT is its to do with me dealing with certain companies - and in order to get some contracts they are wanting to reclaim the VAT element from the invoice,


Don't quite get this point? If your not VAT registered then your not going to be charging them VAT so they are already getting the price without VAT i.e. there is no need for them to claim anything back.

Not Vat registered - You charge £100 - they pay £100 - job done
Vat registered - You charge £100 + 20% VAT - they pay £120 & have to claim back £20

(or am I missing something?)


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## justina3 (Jan 11, 2008)

David said:


> the reason one might be going to be charging VAT is its to do with me dealing with certain companies - and in order to get some contracts they are wanting to reclaim the VAT element from the invoice, its not through turn-over (yet) but if i get enough work, i reckon it wouldnt take a few years before i hit the 68-70k margin to be honest (turnover not profit btw)


I cant see why a supplier would want you to charge them vat for example non vat invoice 60.00 against a vat invoice of 60.00 plus vat = 72.00 so the supplier would have to pay your 72.00 and depending on when there vat return falls due they could have to wait up to 3 months to claim there 12.00 back i dont see the advantage myself, unless i have missed something.


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## justina3 (Jan 11, 2008)

Rob_Quads said:


> Don't quite get this point? If your not VAT registered then your not going to be charging them VAT so they are already getting the price without VAT i.e. there is no need for them to claim anything back.
> 
> Not Vat registered - You charge £100 - they pay £100 - job done
> Vat registered - You charge £100 + 20% VAT - they pay £120 & have to claim back £20
> ...


:lol: i was just asking the same question myself spooky


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## DMH-01 (Mar 29, 2011)

justina3 said:


> I would be interested to hear what the other reasons would be.


Without going into too much detail I'll give you a few examples...

1. Some companies only do business with other VAT registered companies.
2. Being registered for VAT will make it harder for other people/competitors to guess what your turnover is.
3. Some companies buy in VAT rated goods but the services they offer are exempt rated so they are always due a refund.


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## justina3 (Jan 11, 2008)

DMH-01 said:


> Without going into too much detail I'll give you a few examples...
> 
> 1. Some companies only do business with other VAT registered companies.
> 2. Being registered for VAT will make it harder for other people/competitors to guess what your turnover is.
> 3. Some companies buy in VAT rated goods but the services they offer are exempt rated so they are always due a refund.


I hear what your saying but i still dont buy into the idea,

No1 never heard of that before i run three different companies and in 25 years never been asked to register for vat or they wont deal with me. 
2. dont quite follow that one as the op is setting up a company all his accounting records will be easy to obtain from companies house vat registered or not. 
3. again not relevent to the case in hand as the op stated he needed or wished to charge vat on his sales

guess its all down to different people run there companies in there own way.


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## DMH-01 (Mar 29, 2011)

justina3 said:


> I hear what your saying but i still dont buy into the idea,
> 
> No1 never heard of that before i run three different companies and in 25 years never been asked to register for vat or they wont deal with me.
> 2. dont quite follow that one as the op is setting up a company all his accounting records will be easy to obtain from companies house vat registered or not.
> ...


We were not talking about the OP, I gave you answers as to why a company may register early for VAT as that was the question you asked me 

2. He's accounting records wouldn't be available till the end of the first year so how would you guess his turnover? Quick and easy to check an invoice 

3. I already advised the OP that he doesn't need to register for VAT; my answer was in reply to you asking "God knows why anyone would register early".

Agree with your last point, no company is the same hence why I have to advise my clients on their circumstances.


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## Guest (Oct 12, 2011)

Rob_Quads said:


> Don't quite get this point? If your not VAT registered then your not going to be charging them VAT so they are already getting the price without VAT i.e. there is no need for them to claim anything back.
> 
> Not Vat registered - You charge £100 - they pay £100 - job done
> Vat registered - You charge £100 + 20% VAT - they pay £120 & have to claim back £20
> ...


You would not be able to claim VAT back on any products/services you buy. Might affect costs, probably more so if you are b2b rather than b2c.


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## David (Apr 6, 2006)

im not going into too much detail...as its my business.

Company A only deal business to business and want to deal with a vat reg'd company

not my words or contract set-up - i merely asked a question (which also got answered) whether you agree with this company is entirely up to yourself justin and the other person who questioned it


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