Accounts sdvice please .

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fatboy47
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Accounts sdvice please .

Post by fatboy47 » Wed Jul 17, 2019 9:07 pm

OK..briefly.

A friend is opening a buisness thats trading in non-vat-able services.. ( nursery)

Opening in 3 weeks time, registration has been very successful. Her accountants have advised her to limit her incomings to , i think, 85k.

Now, I understand that this is a threshold figure, and that if above it she will need to register the buisness....but what I'm not clear on is ...why would the accountants advise this?...surely the higher the incomings the better?...

I guess the answer will be obvious to some of the finer economist brains on here.??

Any advice gratefully received.

dpinsussex
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Re: Accounts sdvice please .

Post by dpinsussex » Wed Jul 17, 2019 9:09 pm

Bigger the income the more tax you pay, the more u need a decent accountant

Simples really

Ps get xero as the software u use

Funkydrummer
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Re: Accounts sdvice please .

Post by Funkydrummer » Wed Jul 17, 2019 9:11 pm

£85,000 is the VAT threshold.

https://www.gov.uk/vat-registration/calculate-turnover" onclick="window.open(this.href);return false;

TVC15
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Re: Accounts sdvice please .

Post by TVC15 » Wed Jul 17, 2019 9:19 pm

Yep the advice relates to the VAT threshold

They are probably going through the hell of digital tax returns with lots of their clients at the moment.

That said I doubt very much any accountant would say limit your turnover (and therefore your resulting profit) to £85k if there is potential to generate far higher turnover. If you expect your turnover to be around this figure then it could be worthwhile keeping it under to avoid certain costs which are associated with being VAT registered - higher accountants fees, software costs etc
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fatboy47
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Re: Accounts sdvice please .

Post by fatboy47 » Wed Jul 17, 2019 9:28 pm

Thanks tvc....thats roughly what id suspected...makes sense now..cheers.

dpinsussex
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Re: Accounts sdvice please .

Post by dpinsussex » Wed Jul 17, 2019 9:32 pm

Limit your turnover suggests take cash and dont declare it.
I do not believe any legitimate accountant would risk such nonsense.
Your business grows, you have to pay and charge apropriately.
My suggestion is.listen to what the accountant ACTUALLY said
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1968claret
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Re: Accounts sdvice please .

Post by 1968claret » Wed Jul 17, 2019 9:36 pm

I think the advice is probably to keep below the bat threshold. However, the advice is strange if the supply is of VAT exempt services. If that is the case, it wouldn’t matter what the turnover is as it is all expense from VAT and therefore she wouldn’t be able to register for VAT even if she wanted to!
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Tall Paul
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Re: Accounts sdvice please .

Post by Tall Paul » Wed Jul 17, 2019 9:38 pm

It's a nursery so, as you've said, the income is exempt from VAT. Therefore the VAT threshold doesn't apply and there's no need to limit her income.

Sounds like your friend needs a better accountant.
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rob63
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Re: Accounts sdvice please .

Post by rob63 » Wed Jul 17, 2019 9:39 pm

If she goes over the £85,000 threshold then she would have to charge VAT to her customers, this would add 20% to her invoices- this may be too much for her clients, especially initially in a new business. Everyone knows people who ask tradespeople to 'lose' the vat, this puts added pressure on a new businessperson which really is unhelpful in the first few years in business, this could be a reason for her accountant to advise her to keep her turnover low initially.
Has she been on a business studies course? They are really invaluable in guiding you through accounting, marketing, business computer skills etc. The world is full of failed businesses from people who are good at their jobs but not necessarily business minded. The two things don't always go hand in hand.
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aggi
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Re: Accounts sdvice please .

Post by aggi » Wed Jul 17, 2019 9:45 pm

If it's a nursery then the fees are very possibly exempt (not zero rated) which means the £85k threshold doesn't mean anything as that only relates to VATable supplies (even if zero percent).

I can't remember the rules offhand, I think it may be whether they provide education and how they're registered.

However there are options to recover VAT through the local authority.

It's probably worth them having a more detailed chat with the accountant.
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dsr
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Re: Accounts sdvice please .

Post by dsr » Wed Jul 17, 2019 10:33 pm

Is she registered with Ofsted? Virtually all nurseries are, and if so, their turnover is exempt from VAT. VAT threshholds are irrelevant and no input VAT is recoverable.

If she isn't registered with Ofsted, then supplies are standard rated and the £85,000 would be a sensible number.

https://www.gov.uk/hmrc-internal-manual ... atedu36900" onclick="window.open(this.href);return false;
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fatboy47
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Re: Accounts sdvice please .

Post by fatboy47 » Wed Jul 17, 2019 10:43 pm

Yes...ofsted registered dsr.

I guess tvc has it right when he says its probably about not sitting just above the threshold and accruing pointless expense...as registration is compulsory above 85k despite the zero vat rating.

Thanks to all you people though...appreciated.

dsr
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Re: Accounts sdvice please .

Post by dsr » Wed Jul 17, 2019 10:47 pm

fatboy47 wrote:Yes...ofsted registered dsr.

I guess tvc has it right when he says its probably about not sitting just above the threshold and accruing pointless expense...as registration is compulsory above 85k despite the zero vat rating.

Thanks to all you people though...appreciated.
But it's not zero rated. It's exempt. Unless they have changed the rules very recently. Ask the accountant the difference; if he doesn't know, bin him.

aggi
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Re: Accounts sdvice please .

Post by aggi » Wed Jul 17, 2019 10:48 pm

fatboy47 wrote:Yes...ofsted registered dsr.

I guess tvc has it right when he says its probably about not sitting just above the threshold and accruing pointless expense...as registration is compulsory above 85k despite the zero vat rating.

Thanks to all you people though...appreciated.
No. That's not the case. It's not zero rated, it's exempt. The two are different.

TVC15
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Re: Accounts sdvice please .

Post by TVC15 » Wed Jul 17, 2019 10:58 pm

If you want a second opinion on this talk to Egan Roberts in Ribchester....sounds like a new accountant might something to consider !

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Re: Accounts sdvice please .

Post by Hipper » Thu Jul 18, 2019 7:08 am

It might also be worth talking to other registered nurseries to see what they do.

fatboy47
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Re: Accounts sdvice please .

Post by fatboy47 » Thu Jul 18, 2019 7:59 am

Thanks folks....got this now..to a degree I think my friend has either been misadvised or has misunderstood the advice given.

Its clear that you dont need to register if your services are vat exempt...Its possible that the advice given was aimed at her potential purchase of vat rated goods from potential suppliers...we will clarify that asap..

But we're on it now...

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