Vat Estimates

Hi we have been just below the VAT threshold for a while and are likely to be having to register in the next 6 months or so. We are monitoring it monthly and it is the main reason we got signed up with Quickfile to be ready. We are a B2c type of business.

I calculate this by downloading statements to excel and watch the rolling 12 months.
Two things, is there a system within QF that keeps an eyes on it?
Also which reports that are available in QF are best to use to give an indication of likely VAT charges?
Or is there another way to get an idea, as we would just like to have a better idea of expected costs.

Hi @outdoors

I’m sorry for the delay in replying, there isn’t a way of seeing this, unfortunately.

I’ll leave this thread open for a bit longer, as another user may have some suggestions.

I’m my experience businesses have to increase the prices they charge their customers when they register for vat.

The only way to know the effect on your type of business is to work it out from your current profit and loss report.

Let’s say your sales and your stock(goods purchased for resale) are all rated at 20% VAT.
To simulate bring vat registered you have to remove the vat from all the totals on you current Profit And Loss report:

First take off the vat (divide it by 1.2) from both Sales and Stock totals shown on your current P&L report.
Then deduct the new stock value from the new sales value which will give you a new Gross Profit (it will be less than your current gross profit show on your P&L report.)
If you buy and sell product which are classed as 5% and 0% vat, it’s trickier to work out the above.

Now for the expenses which are very tricky as some providers may not be vat registered and some expenses are not vatable or at the reduced rate or are zero rated for vat.
So let’s say you look at all your expenses and only half are at standard 20% vat and half are not vatable (in effect that’s 10% of total expenses is vat).
Divide the expenses total by 1.1, to get the excluding vat value for total expenses.

Now all new figures exclude vat so deduct the new expenses value from your previously calculated new gross profit, to give you the new Net Profit.

Now you have your new Net Profit as it would have been if you were vat registered.
So you can decide if you need to increase your Sales prices to maintain an acceptable profit, or swallow the extra cost of vat with reduced profits.

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