VAT Question & Other legal queries

[dscontroller]

I recently sold my business, but have been on the net now for 8 years retailing various items.

Our address was a P.O. Box number and even with the new owner is still a P.O Box No. We have always used a B.T. landline for contact and this is shown on all the website pages. Maybe this was the saving grace.

Fortunately, the website still does good business, so not everyone is questioning our honesty and integrity!

David

[CymraegKev]

Any company claiming they don't need to be Vat registered and yet paying for a website designer sounds a little bit dodgy, I wonder if the Customs & Revenue Department look in on this forum?

I'm a web designer and was advised by Customs and Excise to withdraw my VAT status because my year-on-year turnover had dropped below the required limit . "As soon as your turnover reaches the threshold again then you need to re-register" - that was their advice. Most of my clients are more than happy when I say I am not VAT registered as it's one level of "effort" less for them. In fact, on two occasions, I have won contracts BECAUSE of this!.

Kevin

[tdw]

I am not VAT registered and I recently imported about £6000 worth of goods, my shipper arranged a temporary VAT number which I will use on future imports whilst I am under the VAT limit.

[buspassjohn]

The reference was to retailers claiming they were under the Vat threshold and yet willing to pay a designer to design a website for them, not to people like designers who are selling their time, not products, they can therefore get a living from under the threshold.
A retailer that has to pay all his expenses, a web designer plus get a living, all from his profit margin on a turnover under the Vat threshold is either a dreamer or telling porky pies to the Vatman about his real turnover.
Just do the sums.

[Mike Hughes]

John,

Your calculations would only apply to an established retailer.

Many web retailers will be at the early start-up / growth stage and will be investing heavily and/or not drawing a salary. Under these conditions the sums are very different and yet these are the very people who need the help of a good designer most. None of this would give me reason to call them dodgy.

Mike

[retekdirect]

Can i just chip in with the following page that some of you may find useful:

http://www.tradingstandards.gov.uk/cgi-bin/bglitem.cgi?file=BADV065-1111.txt

Scroll down to "Website checklist".



Ryan

[retekdirect]

For those of you who are as lazy as me , here's the checklist:

# Full company details - name, a UK geographic address and an e-mail address.

# Full terms and conditions which are readily accessible, fair and meaningful.

# A description of the goods or services being sold.

# Pricing information, fully inclusive of any delivery charges, taxes, excise duty, etc.

# Information about how long the offer or price applies.

# Details of stages involved in the ordering process, including any costs involved in distance communication, if the cost is at anything other than a standard rate.

# The different technical steps to follow to conclude a contract, so that consumers are made aware of what the process will involve and the point at which they will commit themselves.

# Information about the availability, delivery and despatch of goods.

# Information about substitutes in the event that goods or services are not available, including telling the consumer that the cost of returning unsatisfactory substitute goods will be refunded.

# Clear complaints procedure and policy on returning goods.

# Information about withdrawal / cancellation rights.

# A statement that the UK law is the applicable law.

# A statement indicating that, when buying goods and services on the Internet, the consumer is entering a legally binding contract.

# The technical means for identifying and correcting input errors prior to the placing of the order.

# A data protection statement.*

# A privacy policy and information about security issues.*
# A cookie (unique identifier) policy.*
# An opt in box for unsolicited e-mail.*

# Details of any Registration Scheme to which you belong (e.g. Corgi) and your registration number or other means of identification in that register.

# Details of certain professional bodies** you are registered with, your professional title and applicable rules (e.g. chartered surveyor and RICS).
# Details of any Code of Practice to which you subscribe.
# VAT number (if appropriate).


*These provisions are by virtue of Data Protection legislation and the Privacy and Electronic Communications (EC Directive) Regulations 2003 both enforced by the Information Commissioner, detailed advice on these provisions can be found on their website:

http://www.informationcommissioner.gov.uk

** For details of what constitutes a "regulated profession" by virtue of the E Commerce Regs see www.dfes.gov.uk

[magicalwonders]

A retailer that has to pay all his expenses, a web designer plus get a living, all from his profit margin on a turnover under the Vat threshold is either a dreamer or telling porky pies to the Vatman about his real turnover.

O.K. lets do some sums. What if the retailer has a small mail-order business in a niche market working from home? There are a lot of people who have their own business and work from home in the U.K. Not every type of retail business requires a High Street or Business Park location. If the mark-up for their product is high enough, there is no reason why they can't make a nice living by trading under the VAT threshold. It comes down to what their expenses are.

A business isn't dodgy just because they are not VAT registered. A business is dodgy if the person running it is dodgy! That means that a VAT registered business is just as likely to be dodgy as a non VAT registered business. For example, anyone know of a VAT registered business that will do a job for cash in hand? Of course you do, their are thousands throughout the U.K. who will do this.

I'm not saying that all non VAT companies are legit, but it shouldn't be the sole criteria for passing judgement on a business. I believe that each case would present a unique set of circumstances.

Myles

[buspassjohn]

Myles,
when you find something with that high a profit margin, keep it to yourself, but bear in mind you can only make a profit on your added value, as in Value Added Tax

[chris ashdown]

You buy actinic at £350+Vat=£410
You pay a developer £1000
You pay £200 for server etc
You pay £1000 for advertising PPC
Total spent £2610

Wages = £14000
Total outgoing without taxes etc = £16610

Buy 3000 t shirts at £1.25 = £3750
Screen print with cartoon = £900
Total stock costs=£4650

Sell 3000 t shirts at £7.50 each=£22500

I have a friend who sells t shirts on ebay at £9.95 and has quite a high turnover so hard to do but not impossible

Dont forget if you sell to the public being non vat registered gives you a great advantage if your raw purchases are low priced compared to the selling price, to sell to businesses it works the other way round in that they can claim back the vat so it appears cheaper.

[Mike Hughes]

I was going to say where can you buy t-shirts for £1.25, took a look and found this actinic site: http://www.europeanwear.com/acatalog/index-buy.html

White t-shirts from 99p for 500. (only £1.09 for 100, £1.19 for 10)

Maybe I'm in the wrong business.

Mike

[ChrisL]

I agree that dabs in particular are remiss in not providing a telephone number.
For that reason alone I would use misco.co.uk (formerly simply computers). Plenty of 'phone help before and after purchase + equally good prices & efficient service.
No, I am not a shareholder!

More seriously, it is quite amazing just how many ecommerce sites do not provide 'phone numbers or physical address details. If they have nothing to hide, why hide?

[magicalwonders]

I'm surprised at Dabs not providing a phone number. I believe most customers would be more comfortable buying from a company they can contact by phone if something goes wrong.

It's amazing how even the biggest companies like Dabs get it wrong occasionaly. Remember the Hoover fiasco? Free flights when you purchased a hoover product! In their dreams maybe.

My own market is now deluged by copycat internet businesses. They provide no contact details other than email. Every site looks the same. They carry no stock and use the clients money to purchase the goods from the wholesaler!
Plus, most of them are what I call hobbyists who already have a 9 -5 job. About five years ago there were only about 50 other businesses in the U.K. that do what I do. Now when you search the internet (UK) there are hundreds!

Anyone who has a PC and an internet connection can jump on the bandwagon and dilute the market place. They flag themselves by not providing a phone number (They're out doing their regular job, so can't answer the phone anyway!) They don't want you knowing where they live, so no address. If you're lucky you might get an email address. (Hotmail of course)

O.K. enough of my rant. Can you tell I've had a bad week?

Myles

[buspassjohn]

Chris,
you seem to have forgotten all the Vat you have to pay on your supplies, clicks, Ebay charges etc., and can't claim back. That's another 17.50% on your overheads.
Sorry, just noticed you can live on £14000, where is this? in UK?

[CymraegKev]

I guess it really depends on your target clients. If your clients/customers are not VAT registered (as of course most general shoppers aren't) then passing on the VAT charges could back fire a bit. Obviously the paperwork overhead too and accounting charges add up with VAT.

I guess that there is an argument for both cases, but ultimately each business model is unique and either merits or does not merit being VAT registered.

Of course, reach the threshold and the decision is taken away from you any way by the good old HM C&E....

Kevin