Tips and stories to add value to you and your organisation
I really don’t mind paying taxes, after all I use the roads and schools and so on, so it seems reasonable to pay up and be part of society.
In business we have to pay tax on our earnings and pay corporation tax if we are a limited company. I also add VAT to my invoices and happily collect money for the government. VAT is a one of those things that can cause endless debate, and I’m not making a case for or against it. However, I am saying that if your business is VAT registered then maybe check what rate you pay back at, if like me, you are in the Flat Rate Scheme.
The Flat Rate Scheme makes the quarterly return a doddle. Instead of muddling through a pile of receipts and trying to work out which bit of what VATable expense is applicable, and which isn’t, all I have to do is take my gross invoice total and apply a single percentage to that. A frustrating morning becomes a gentle half hour and all is good.
And all is even better since my accountant challenged my status as a consultant with dear old HMRC. As a consultant I was paying back 14% of my gross invoice total, however a closer look at their definition revealed that the one thing I don’t ever do….is consult. My contracts are for training, coaching and organisational development, where the client owns the agenda and takes responsibility for their decisions and actions. I am not a consultant.
The upshot of this is I’m now registered in a category for ‘other business’ and the joy here is that the rate is only 12%. If that wasn’t enough good news, the change has been backdated to 2013, which means I’m owed a fat rebate on 4 years of VAT paid. So whilst I’ve been acting as a tax collector, the tax collectors have been acting as a savings scheme for me and I’m not complaining about it!
The message of this story is that if you are VAT registered and in the Flat Rate Scheme then talk to your accountant and double check to make sure you are in the right category. I thought I was, but as my accountant knows more about these things than I do, he was confident that he could get them to change. He was right.
I can’t wait to submit my next VAT return as it will be a minus figure and my bank account will go up instead of down. Not a bad result for a couple of letters and a small cost to cover the time from my accountant.
Happy VAT checking this week! Well worth the effort!
Next week: A ‘Cost vs Investment’ Mindset
Click icon for details
Click cover to view details on Amazon
Brilliant ways to increase performance, stay employed and keep the money rolling in
Published 2011 Marshall Cavendish
Secrets and skills to sell yourself effectively in the Modern Age
Published 2010 Marshall Cavendish
An insider's guide to working for yourself
Published 2007 Cyan Books and Marshall Cavendish