23-10-11, 06:47 PM
My view on VAT for what it's worth. The turnover of my company was less than the VAT registration limit in year one of trading but I registered it for VAT nonetheless, on the advice of my accountant.
In the early months I claimed back VAT paid on my capital purchases (computer, printers etc etc); then once they were out of the way I switched to the flat rate scheme for VAT. In basic terms, I bill customers for fees plus VAT at 20% and pay HMRC 14%. The remaining 6% is mine to keep. There's a 1% discount in year one so I only paid them 13% and kept 7%.
The amount of VAT you pay on the flat rate scheme depends on the type of business you're undertaking. Mine is under 'business consultancy'. I have virtually nil capital purchases - no stock or goods, just my time and service - so it works for me.
My accountant did all the setting up of the company for £85 plus the agency fee. His bill for year one was £635 including running my payroll and a full set of accounts and submissions to Companies House. I reckon he saved me about twelve times that amount in the reduction of my tax bill.
In the early months I claimed back VAT paid on my capital purchases (computer, printers etc etc); then once they were out of the way I switched to the flat rate scheme for VAT. In basic terms, I bill customers for fees plus VAT at 20% and pay HMRC 14%. The remaining 6% is mine to keep. There's a 1% discount in year one so I only paid them 13% and kept 7%.
The amount of VAT you pay on the flat rate scheme depends on the type of business you're undertaking. Mine is under 'business consultancy'. I have virtually nil capital purchases - no stock or goods, just my time and service - so it works for me.
My accountant did all the setting up of the company for £85 plus the agency fee. His bill for year one was £635 including running my payroll and a full set of accounts and submissions to Companies House. I reckon he saved me about twelve times that amount in the reduction of my tax bill.