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VAT compulsory in UK?
Thread poster: Miguel Garcia Lopez

Miguel Garcia Lopez  Identity Verified
Spain
Local time: 11:27
Member (2008)
English to French
+ ...
Aug 12, 2008

Hello !

I'm planning to set up a company in UK for my services of translation, web edition, etc...
I'm being told that the VAT is not compulsory when the company is not having a British director and the turnover is less than £ 60000.

How then do you deal when some agencies, or customers require a VAT Number? Most of the agencies in France for example, do not work if you cannot furnish a VAT number....

Any help on this?

Thanks in advance.

Miguel.


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jackiekiefer
German to English
+ ...
My experience Aug 12, 2008

Hi Miguel

Yes, in the UK if you're self-employed a VAT number is only compulsory if your turnover exceeds 60,000 pounds a year (for a limited company they're probably compulsory though). In my case, I had one when I lived in Germany and no longer had one when I moved back to the UK. As far as I'm aware, I haven't lost a single customer as a result. One German agency asked me to include my UK income tax number on the invoice instead for some strange reason, and one Austrian agency asked me to include a note on the invoice saying that no VAT was being charged in accordance with British law, but those were the only two that made any fuss about it. I've never worked with French agencies, so I can't help you out in that respect, I'm afraid.

Jackie


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Williamson  Identity Verified
United Kingdom
Local time: 10:27
Flemish to English
+ ...
Companies House and HMCE-webpage Aug 12, 2008

Refer them to the website of companies house where they can find your registration number. If your company is registered, it pays taxes to HMCE.
Indicate that the treshold is £61,000 and refer to the relevant notice 7000/1 (if I am correct) on HMCE-webpage.
Being a British or non-British director has nothing to do with it. A ltd. is a judicial person, the director can be a Chinese living in China as long as the secretary and the seat of the company is situated in the UK. Where does the boss of Virgin live and where does Virgin has its HQ?
-*-*--*-
A link : www.lowtax.net : you'll find more about offshores there. I believe that an offshore pays 0% taxes if the director is living abroad. (Bahamas, Barbados, etc...) and works part-time at MacDonalds in his country of residence and pays taxes on that income. Have not looked into that into detail. Google: off-shore.
*-*-*-*-
In Slovakia, I would not hesitate to register for VAT.
A flax-tax rate of 19% on everything.

Jan, do you have any idea why some take the trouble to register in the UK? France, Italy, Spain, Belgium, the Netherlands, Germany do not have what you could call reasonable tax-rates. The UK has a business-like mentality, customer-friendly tax-adminstration, does not impose too much rules and regulations if you want do business or become self-employed. When I went there in 2000 after closing my business as a regular self-employed in a high-taxed country and after having paid several fines for small incorrect amounts of VAT, I could not believe my ears when they told me at HMCR that the treshold was £41000.
I do not have much expenses, so deducting VAT is not worth the hassle or running the risk of getting fines.



[Edited at 2008-08-12 12:59]


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Jan Kolesar  Identity Verified
Slovakia
Local time: 11:27
English to Slovak
+ ...
If you haven´t VAT... Aug 12, 2008

Hi Miquel,
you can hardly cooperate with translators with VAT, since their charges will be "+VAT". However, you CAN have VAT without restraint, with no regard to your turnover.

Jan

[quote]Miguel Garcia Lopez wrote:

Hello !

I'm planning to set up a company in UK for my services of translation, web edition, etc...


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xxxJPW  Identity Verified
Local time: 10:27
Spanish to English
+ ...
corrections Aug 12, 2008

1. It's HMRC nowadays, and has been for a few years now, that's HM Revenue and Customs: www.hmrc.gov.uk

2. Compulsory VAT registration starts at £64,000 for this financial year: it usually goes up a bit each year.

3. You can also voluntarily register for VAT if you wish, there's nothing to stop you!

4. Not sure what "VAT without restraint" is exactly referring to...perhaps Jan could explain that one a bit more?

5. When you register with HMRC, ask for their CD-ROM called "getting started in VAT", which does exactly what it says on the tin.

HTH,

JP .

[ps - living in Ulster, I also pay UK taxes.]


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Jan Kolesar  Identity Verified
Slovakia
Local time: 11:27
English to Slovak
+ ...
VAT again Aug 12, 2008

Williamson wrote:

*-*-*-*-
In Slovakia, I would not hesitate to register for VAT.
A flax-tax rate of 19% on everything.

Hi Miguel,
"VAT without restraint" - voluntarily.
The devil (VAT) IS MORE BLACK than he is painted also here (SK). I also have paid them some fines for not catching up their terms. There is a golden rule: Big fines for nothing, no fines for big fraud.





[Edited at 2008-08-12 12:59]


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Ivana Friis Wilson  Identity Verified
United Kingdom
Local time: 10:27
Member (2008)
English to Danish
+ ...
I'd like to know a bit more about no VAT reg. in the UK... Aug 12, 2008

- as I am moving to the UK in a week. I am very tempted to just register as a Sole Trader and not for VAT, but I am wondering what the benefits are, other than avoiding VAT returns.

If anyone would care to explain the pros and cons of vat-reg. vs non-vat-reg. in the UK, I am all ears Well, eyes, really...


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Williamson  Identity Verified
United Kingdom
Local time: 10:27
Flemish to English
+ ...
HMRC-website. Aug 12, 2008

With regard to VAT : http://www.hmrc.gov.uk/vat/vat-introduction.htm
Advantages are that you can deduce VAT on goods/services bought for your business.
Disadvantages: If you make mistakes in your VAT-declaration, you might get fines although in the UK if you explain your mistake to the authorities, they are more lenient than in some other countries.
Explaining to customers in high-taxed countries with low tresholds why you are not registered for VAT-by giving them your company registration number or N.I.number in the case of a sole trader. In some countries, agencies and companies seem to think that if you are not registered for VAT, you are not allowed to engage in business transactions.

If your annual turnover is less than £67,000 (about €85000 at the current exchange- rate) per annum you may opt for VAT-registration, but you are not obliged to do so. If your annual turnover is higher, you must register.


[Edited at 2008-08-12 20:41]

[Edited at 2008-08-12 20:44]


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Ivana Friis Wilson  Identity Verified
United Kingdom
Local time: 10:27
Member (2008)
English to Danish
+ ...
Thanks for the insight, Williamson Aug 13, 2008

I was quite surprised myself the first timem I worked for an agency in the UK with no VAT-reg. But it hasn't caused any problems - yet.

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Miguel Garcia Lopez  Identity Verified
Spain
Local time: 11:27
Member (2008)
English to French
+ ...
TOPIC STARTER
Thanks. Aug 13, 2008

Thank you very much for all your answers!

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Gillian Searl  Identity Verified
United Kingdom
Local time: 10:27
Member (2004)
German to English
You also need to know Aug 13, 2008

that the 64000 limit refers to turnover over in the UK from UK companies/people. They ignore turnover with other European countries. Because most of my income is from companies not based in the UK (most is from the eurozone) I will probably never reach the limit no matter how much I work. So I havent registered for VAT - I can't see any benefit for me! But believe me when I say I wished I had stayed in Germany where I paid much less income tax than in the UK!
Gillian


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xxxJPW  Identity Verified
Local time: 10:27
Spanish to English
+ ...
NI number? Aug 14, 2008

N.I.number in the case of a sole trader.


Why on earth give out your NI number??????????????

You give your NI number to your employer so he can tax you under the PAYE scheme, otherwise no one needs to know it.

That's how fraudsters get new identities for their fraudulent activities. It doesn't need to appear on your invoices.

VAT registration is only compulsory under certain circumstances, others prefer not to, since they don't like the idea of being labelled a tax collector (unpaid) for Revenue and Customs.


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