Vat changes

[eLuSiVeMiTe]

Might effect some of you. Thought worth sharing.
https://probuildermag.co.uk/news/co..._Bfotkrv7enPSx3tbO1ca5NeWyz2djjsErW7eZ5an_9A#

 

[Revs1972]

Well that makes it clear as mud

 

[eLuSiVeMiTe]

Well that makes it clear as mud

I know. On scaffolding atm. Il be doing a bit of reading on it later.
Point is there's a change coming and needs attention.

 

[500e]

The place is full of parasites

 

[Craig-SM]

I’m still getting my head round these changes but basically if you’re a sub contractor under CIS then you will create your invoice as normal with the net and vat amounts. The invoice must state that it is Reverse VAT and the customer pays the VAT to HMRC.
The customer then pas you the net amount and withholds the VAT to pay to HMRC on their VAT Return. You as the supplier will complete your VAT return as normal but do not enter VAT amount in box 1. As you’ll be under Making Tax Digital it will be your software flowing this so you will need to make sure it is compliant.
The contractor will enter the invoice including the VAT. The software will enter the VAT in both boxes 1 and 4 so don’t reclaim the VAT and HMRC receive their VAT.
As a subcontractor you may find that you get VAT refunds from your inputs as you’ll no longer be collecting the VAT on the outputs. As such you can change from quarterly to monthly VAT Returns so you can get your refunds quicker.

 

[brightspark]

glad im not vat registered I keep under the threshold and get punters to buy there own gear if it amounts to a lot

 

[Kayos]

I've been told by a couple of accountants that this could be a precursor to lowering the vat limit massively, £26k and £40k are the figures often mentioned

 

[gaz1]

glad im not vat registered I keep under the threshold and get punters to buy there own gear if it amounts to a lot

i always get the owners to buy all the materials its just easier that way

 

[Keith 66]

All this increasing beauocracy is why so many small buisnesses just pack it in, everyone has his hand out & the person running the show ends up with next to nowt.

 

[eLuSiVeMiTe]

I've been told by a couple of accountants that this could be a precursor to lowering the vat limit massively, £26k and £40k are the figures often mentioned

Grand. That will be me over the threshold.
Like brightspark I've been trying to stay under the limit.

 

[Pigeon_Droppings2]

Just what UK companies need in the run up to the end of October!!!

Thresholds only apply to vattable revenue of course

 

[Craig-SM]

The reason behind this is the amount of sub contractors claiming to be VAT registered and not. By the time HMRC have caught up with them they are long gone, bank accounts emptied and they have lost out on the 20% the contractor has reclaimed and the money investigating it.
I've had one client who had taken on some sole traders who were supposed to be VAT registered. They had the same invoice layout including VAT number with just the address changed. I got both their invoices together, queried it with the client who asked the subbies - electricians. They thought it was a laugh and admitted they weren't VAT registered but put on their invoices for the extra money saying it was victimless as he could reclaim the VAT. My client left them at the services on the way back from London on the Friday to make their own way home with their tools and refused to pay them for the two that were outstanding.

 

[Pigeon_Droppings2]

've had one client who had taken on some sole traders who were supposed to be VAT registered.

Takes about 5 seconds to check the company behind a VAT number online.

I think most people just don't understand how VAT works...they mistakenly think they are missing out on 20%!

 

[Climber]

Takes about 5 seconds to check the company behind a VAT number online.

I think most people just don't understand how VAT works...they mistakenly think they are missing out on 20%!

If I had a pound for every time someone told me if they registered for VAT they'd have to put their prices up by 20 percent just to earn the same, I'd be able to buy more chainsaws.

As you say, people don't understand VAT. Actually, most small business owners don't understand money at all.

 

[colnerov]

Hi, So if I've got this right, I as a domestic householder (the customer) has say work done on the roof or electrics. The tradesman gives me an invoice for £1000 which I pay and goes on his way, I then have to traipse along to HMRC and pay them another £200? Do HMRC think this is going to get them the VAT? Surely this is going to increase people getting work done cash in hand, it doesn't appear to be joined up thinking.

Colin

 

[gaz1]

id agree but you need to inform council of any changes that is happening with your house even fitting a single plug on the wall you have to let council know in our area

 

[Pigeon_Droppings2]

In Holland the householder is responsible for showing all invoices and taxes have been paid....with huge fines if they can't show the correct paperwork!

I suspect we'll end up with a US style system of permits being required for everything....with the permit being posted outside the property...shame really but something has to change in the UK...anyone can see the current tax system is broken!

 

[Craig-SM]

Hi, So if I've got this right, I as a domestic householder (the customer) has say work done on the roof or electrics. The tradesman gives me an invoice for £1000 which I pay and goes on his way, I then have to traipse along to HMRC and pay them another £200? Do HMRC think this is going to get them the VAT? Surely this is going to increase people getting work done cash in hand, it doesn't appear to be joined up thinking.

Colin

Nope. It only applies to CIS not domestic

 

[gaz1]

I suspect we'll end up with a US style system of permits being required for everything....with the permit being posted outside the property...shame really but something has to change in the UK...anyone can see the current tax system is broken!

it already is in my area

however with the tax the little man suffers instead of the big companys

 

[Wightsparks]

Hi, So if I've got this right, I as a domestic householder (the customer) has say work done on the roof or electrics. The tradesman gives me an invoice for £1000 which I pay and goes on his way, I then have to traipse along to HMRC and pay them another £200? Do HMRC think this is going to get them the VAT? Surely this is going to increase people getting work done cash in hand, it doesn't appear to be joined up thinking.

Colin

Not as I understand it
"When you issue an invoice, unless your client is the end-user or owner of the project,"....

You are not going to be CIS or VAT registered as a householder. You would just pay it to the contractor as normal.