Question on VAT registration to UK colleagues
Thread poster: Pat Jenner
Pat Jenner
Local time: 16:06
German to English
+ ...
Jan 31, 2006

I recently applied to Revenue & Customs to deregister for VAT on the basis that although my total turnover exceeds the compulsory registration threshold, I do much more work nowadays for non-UK clients (which is not subject to VAT). They refused my application claiming that although this part of my turnover isn't subject to VAT it does count towards the threshold. This seems illogical to me, and I just wondered if any of you had any comments or have been in the same situation. I operate through a limited company, and am considering whether I could bill my non-UK customers personally rather than through the company to bring the turnover down, though I fear that this might make things too complicated.

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Ingo Dierkschnieder  Identity Verified
United Kingdom
Local time: 16:06
Member (2004)
English to German
+ ...
Bad news Jan 31, 2006

Pat Jenner wrote:

I recently applied to Revenue & Customs to deregister for VAT on the basis that although my total turnover exceeds the compulsory registration threshold, I do much more work nowadays for non-UK clients (which is not subject to VAT). They refused my application claiming that although this part of my turnover isn't subject to VAT it does count towards the threshold.


I am afraid they are right: it doesn't matter if all your income is subject to VAT, if you reach the threshold you have to register for VAT. There is no way around it and the Inland Revenue will not hear to reason as a threshold is a threshold is a threshold.

Pat Jenner wrote:

I operate through a limited company, and am considering whether I could bill my non-UK customers personally rather than through the company to bring the turnover down, though I fear that this might make things too complicated.


I doubt that will be possible. You would have to declare that you run a second business under which you would bill your non-UK customers. Therefore, you would provide the IR with two supplements "Self employment". However, as you would be the owner of both businesses, both the turnovers would be combined and you would again arrive at the turnover that requires you to pay VAT. The only way around it would be to have a partner take over the second business, at least on paper, so the businesses would be separate from each other. As you already assumed, far too complicated.

Good luck
Ingo


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Ian Lumpitt-Hawes
Local time: 16:06
French to English
Why deregister anyway? Jan 31, 2006

I don't understand why you would want to deregister. If you do, you have to pay VAT on all your office supplies, PC equipment etc. A lot of our work comes from other EU countries, so we sometimes get a cheque back from our friends at Customs & Excise, rather than sending them one.
Plus how can you seriously be in business without being registered for VAT? All your business customers will be registered anyway, so it doesn't cost them.
My 2p


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xxxMarc P  Identity Verified
Local time: 17:06
German to English
+ ...
Question on VAT registration to UK colleagues Jan 31, 2006

Being registered for VAT enables you to reclaim the VAT on business expenditure. It also makes you look much more like a respectable business, particularly to customers in countries such as Germany, where the threshold for compulsory registration is much lower.

My turnover means that I must be registered, but I would still prefer to be registered even if I were below the threshold. The advantages far outweigh the disadvantages IMO.

Marc

[Edited at 2006-01-31 17:04]


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Laure Trads  Identity Verified
France
Local time: 17:06
Member (2004)
English to French
VAT refund Jan 31, 2006

I work mainly with customers who I do not have to charge VAT to. However, I deduct VAT on business expenses. As a result, for 2005, I just got €531 back, which I would not have had if I wasn't VAT registered.

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Pat Jenner
Local time: 16:06
German to English
+ ...
TOPIC STARTER
A bit more explanation on why I wanted to deregister Feb 1, 2006

Thanks for your comments. It does seem as if I'm stuck with it. I just wanted to explain why I wanted to deregister: it's costing me more to pay my accountant to deal with the paperwork than I am recovering as refunds of VAT on input costs, so it's not cost-effective. I suppose I could do the figures myself, but I suspect that the time it would take me to do so would be more profitably spent translating. The point about being VAT-registered making me look more professional is an interesting one, I hadn't considered that.

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Anne Lee  Identity Verified
United Kingdom
Local time: 16:06
Member (2003)
Dutch to English
+ ...
Accounts: precisely why I did not register Feb 1, 2006

Well, that is precisely why I did not register for VAT: I am not very good with figures and the additional administration would be more than I can cope with. I had an accountant one year but since I still had to do the lion share of the basic accounts myself, I am going it alone now. It is one of the many reasons why I no longer subcontract work, because I don't want to risk crossing the VAT-threshold. It means that I cannot claim back VAT on other people's work either, of course,let alone on the goods I buy. I wish to review this at some point (when I do my accounts in March, probably) and I am grateful to you for raising this topic.

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Zsanett Rozendaal-Pandur  Identity Verified
Hungary
Local time: 17:06
Dutch to Hungarian
+ ...
Is it really that bad? Feb 2, 2006

Pat Jenner wrote:

Thanks for your comments. It does seem as if I'm stuck with it. I just wanted to explain why I wanted to deregister: it's costing me more to pay my accountant to deal with the paperwork than I am recovering as refunds of VAT on input costs, so it's not cost-effective. I suppose I could do the figures myself, but I suspect that the time it would take me to do so would be more profitably spent translating. The point about being VAT-registered making me look more professional is an interesting one, I hadn't considered that.


I didn't think it had that much to do with figures, really. You just keep your VAT-specified bills and every time you buy something you enter it in your administration (or you just save up all the bills and deal with it once in every few months). It's just adding up all the VAT amounts, and filling it in on the form - I don't think it takes more than 30 minutes each time. I definitely consider this worth the money I get back.


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Daniele Martoglio  Identity Verified
Local time: 17:06
Polish to Italian
+ ...
It's so complicated in UK? Feb 4, 2006

In Poland all my contability it's ONE FILE excel.. After VAT: 2 columns more!

And every month, instead of writing only the Personal Income Tax statement, i must also fill the VAT statement: 10 minutes more. Oh, i must write with a pen (!!!) all that is in this excel file on the paper, because so wants the polish tax system.. It's heavy work, but rather for muscles of hand, not for brain..

Pat Jenner wrote:
The point about being VAT-registered making me look more professional is an interesting one, I hadn't considered that.


In Poland it's so. If you are a VAT-payer, the companies think: "he's already VAT-payer. So it has many clients. So he's good". May be it's not logical thinking.. but it works..

Daniele


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xxxMarc P  Identity Verified
Local time: 17:06
German to English
+ ...
...and in Germany: Feb 4, 2006

Simply add up the total of the net (i.e. before VAT) amounts from all invoices paid by German customers in the relevant quarter (or month, if you have submit returns monthly). Enter it in the right box. Do the same for other EU customers and put the amount in the right box for that. You can also total your VAT-related costs and enter them in the box provided, but you don't have to - if you don't, you just have to wait until your annual return has been processed before you get the money back.

The electronic procedure which is now standard calculates the VAT amounts and total due automatically.

The form goes off into the Internet, and the money can be collected by direct debit. The whole thing can even be done on Linux:

http://www.linuxfortranslators.org/linux/misc/elster.html

Moderator: please delete if this self-publicity is out of order.

The whole thing takes me fifteen to thirty minutes, depending upon how many invoices were settled in the period concerned, per month or quarter, and that includes cross-checking that the automatically calculated VAT amounts agree with those on my invoices. If you have time to post here, you have time to do your own VAT returns.

Marc


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Lagom  Identity Verified
United Kingdom
Local time: 16:06
Swedish to English
Which VAT accounting method is best for UK TSPs Feb 15, 2006

On the subject of UK VAT and the translation industry, which accounting method (flat rate, cash accounting, annual accounting)is preferable (from experience) for translation service providers?

Thanks,
Ben


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