RE: Re: Graphics Kits for older bikes
hi ned
i am not involved in adding it but i have to pay it up front and as a non-vat registered payer i am therefoire also a non vat adder. aha! i hear you say, so that means all your customers are 15% better off!
well no, they have to pay a margin on top of my trade price which had vat on it so i keep a margin.
example
business A buys a product at £100 plus VAT at 15% so they pay £115 inclusive. they then sell the product for £200 plus vat and the total is £230 to the customer. they then claim it back at the end of the quarter. they add up all the vat they paid out (£15 here) and then add up all the vat they got back (£30 here) and put column B against column A and pay the difference.
you make no profit from VAT, you are government tax collector.
in effect, you're paying VAT on your profit. VAT is chargeable on everything: labour, parts, postage.
in my case, i pay £115 for the product and add the profit of £100 making the total £215 to the customer. my margin is still £100 but the product is £15 cheaper! the problem is that the product was £200 before VAT but that i'm charging £15 more than the RRP.
so you could argue three ways here:
1) i should charge the same price as a VAT registered business at £230 and net extra profit....after all it's what the customer pays that matters!
2) i should carry on as i am and remain cheaper than registered business' but retain the same margin....
or
3) the retail is £200 and i should only charge £200 and if my margin is eaten up with vat then tough!
the way i look at it, the customer is getting a good deal and i'm cheaper than registered companies.
so although i said i have to add vat: it was a rhetorical question.
regards
Taffy