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FORUMS Post Processing, Marketing & Presenting Photos The Business of Photography 
Thread started 25 Jan 2014 (Saturday) 11:31
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VAT

 
chrismid259
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Jan 25, 2014 11:31 |  #1

Hi,

I'm starting my own small business selling prints of my own work. I have a few questions about VAT. This is mostly questions for UK members of this forum.

My first question is, do I need to charge VAT if I'm not VAT registered? I've looked through the HMRC website quite a few times, but I can't seem to make head and tail of this.

If I need to charge VAT, what is the rate of VAT for photographic prints, canvases etc? I'm asking this as I read on the HMRC website that VAT on photography is at a flat rate of 11%. Does anyone here have a business that is charging this rate of VAT? To me, the description of 'photography' is very brief. There are many types of photography.
http://www.hmrc.gov.uk …t/schemes/flat-rate.htm#5 (external link)

Many thanks.


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Plumtreelad
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Jan 25, 2014 11:49 |  #2

I believe that there is a threshold and provided your annual income falls below that threshold you do not have to charge VAT. The threshold is currently £79,000. You can elect to register for VAT and sometimes when starting up a business some people do elect to register so that they can claim back VAT on equipment etc that they need. My advice is to steer well clear of VAT if you can. The paperwork can be demanding!


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chrismid259
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Jan 25, 2014 12:55 |  #3

Plumtreelad wrote in post #16635825 (external link)
I believe that there is a threshold and provided your annual income falls below that threshold you do not have to charge VAT. The threshold is currently £79,000. You can elect to register for VAT and sometimes when starting up a business some people do elect to register so that they can claim back VAT on equipment etc that they need. My advice is to steer well clear of VAT if you can. The paperwork can be demanding!

Many thanks for your reply. Just after posting this I read that the threshold is £79,000. I think I may steer clear of VAT, as you say.

Thanks again.


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BigAl007
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Jan 25, 2014 23:46 |  #4

I just checked that leaflet, the flat rate scheme reflects the amount of VAT that YOU pay to Customs and Excise. You would still charge the customer the standard rates of VAT. Normally for photographic services and the items that go with that, prints, canvases etc that would be 20%. This is a scheme for those who only just fall within the VAT requirements, and is simpler to administer as there is much less record keeping needed. You do not get to claim back the VAT on purchases for the business, and simply pay the VAT man a fixed percentage of the turnover 11% in the case of photography. I guess that the rates you pay are based on the average differences between VAT charged on supplies and the VAT you would be paying. If you are mostly supplying services, rather than selling goods then you will tend to be charging a lot more VAT then you would be claiming back. You will notice that Retailing food, confectionary, tobacco, newspapers or children's clothing only pays 4%, this is because much of this retail sector is based on zero rated goods. You can still claim back the VAT on your camera equipment, as long as you spend at least £2000 at a time.

I would think that if you had a photographic services business that turned over between £79000 and £150000 this would be a good way of dealing with the VAT. I know that £79000 sounds like a lot of money but remember that this is based on turnover not profit. If you are doing the photography full time and actually making a decent living out of it then it will be quite easy to hit the VAT registration limit. At least if you do hit the VAT limit this scheme makes it quite easy in the first year, and for your first year you get a 1% discount too. If you are generally selling your service and associated products to the general public there is no advantage to voluntary VAT registration. If though your main customers are VAT registered too, and you are selling them mainly goods then they will prefer that you are VAT registered so that they can claim the VAT back. If you are only selling them a service it doesn't matter so much as either way there is no VAT affecting the cost to them.

The really nasty thing about VAT is that it is a government tax, that can be very complex at times, that you as a business is forced to collect on their behalf, and you had better get right too; OR ELSE!:)

Alan


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Tibouchina
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Jan 26, 2014 09:48 |  #5

If your turnover is under £79,000 pa you do not need to register for VAT. In this case you cannot charge VAT nor reclaim VAT on purchases or services for the business.

Below this annual turnover figure there are advantages and disadvantages in registering for VAT. If your business consumes a significant amount of goods or services registering will allow you to reclaim the VAT on those items, reducing your input costs. However, you will also have to charge your customers VAT at the standard rate of 20%, raising your apparent prices. You'll also have to do the paperwork to reconcile the difference between your VAT charges and claims and then pay the government the difference at whatever rate is applicable to your business.

You can register at any time - but, once registered, you are in the VAT net permanently as long as the business survives.


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RobKirkwood
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Jan 26, 2014 10:57 |  #6

Tibouchina wrote in post #16638029 (external link)
You can register at any time - but, once registered, you are in the VAT net permanently as long as the business survives.

Not strictly true - you can de-register provided you can convince HMRC that your turnover is below the threshold (easy bit) and has no prospect of increasing (less easy bit). We de-registered about 18 months before fully closing down our photography business (retirement).

Rob




  
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chrismid259
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Jan 26, 2014 11:01 |  #7

Many thanks for all your replies. Whether I should be charging VAT or not seems clearer now.


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