Hi,
I am a PR and looking to do some freelance work. Will I need to charge VAT on the service? I have read that I will not have to pay VAT until my turnover is ?4k. So, I am little confused.
Can anyone help?
Thanks, moo
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You don't have to charge VAT unless you are VAT registered.

You're not compelled to register untl your turnover is over the threshhold - which is around ?4k

Duane
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Thank you Duane.
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But neither can you claim back VAT if you are not VAT registered. You can elect to register for VAT at any time. You don't have to wait until you pass the VAT threshold in any 12 month period. If you are principally selling services to other businesses then most of them will be able to reclaim VAT, so it has no cost advantage for the services you are providing. If however, you are selling to Joe Public, then your charges can be lower because you don't have to add VAT on top. Peter
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As Duane says, you do not need to register until your turnover is ?7K.
You may register voluntary if your turnover is below.
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Best to seek advice from an accountant - they can advise you on whether your business could benefit (or not) from registering if you're below the threshold.
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Best to seek advice from an accountant - they can advise you on whether your business could benefit (or not) from registering if you're below the threshold.

Sound advice.

It might be that being registered and using the flat rate scheme will leave you better off.
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Sound advice.

It might be that being registered and using the flat rate scheme will leave you better off.

Flat rating is a decision best made with consultation with an accountant as the benefits are dependent upon how close your business model is to the industry average for your type of business, affected by the level of capital expenditure which might allow an additional claim. Also as there is a 1% first year bonus it is often best to delay going for the flat rate scheme until the first year capital expenditure has been claimed and sales have increased in the second year to make the 1% one year bonus more benficial.

Consider all the factors before making a flat rater decision. Often the best decision but timing is important too.
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Couple of points that need to be borne in mind:

The ?7k threshold has been mentioned, but this is ?7k in ANY 12 month period, not just your financial year end, or 5th April, or 31/12. It has to be done on a rolling 12 month basis. (12 months to August, 12 months to September etc.)

The flat rate scheme is highly dependent on actual figures, so it would be worth comparing what you've done thus far, notionally under each regime. No point in going for it, and finding later that it costs you.

The 1% discount is for the first year of registration, not the first year of using the scheme.

Cheers
Dave

Edit: the only other point is that if your customers are VAT registered and likely to be able to reclaim VAT that you charge, it would be as well to register now rather than waiting till you've hit the limit (unless, of course, you have an adverse attitude to being VAT registered!)
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Hi

Flat rate vat is usefull if you are in the service industry (I am not sure what you mean when you say 'I am a PR'), this enables you to payover vat at say 13% on your gross sales, which is less than the 17.5% on the net sales. But the thing to remember is that any vat not paid over by you becomes taxable as part of your profits.

I would say that unless you make lots of vatable purchases registering for vat (standard) is best left until you know you will hit the threshold in the next couple of months. :)
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