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Sam
Sam, Accountant
Category: Tax
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I am trying to avoid the £82,000 threshold before I have to

Resolved Question:

I am trying to avoid the £82,000 threshold before I have to register for VAT. I have a buisness that provides plumbing, gas and heating services to customers and 50-60% of all the installation work I quote for is swallowed up in materials. To avoid this threshold I want to have customers pay for materials for installation jobs directly to my suppliers to keep my turn over lower.
What I want to know is firstly, is this legal? Secondly to ensure I do not put my self out to people short bidding me I would like to quote for the job, take a deposit to secure it and have them pay for the expensive equipment directly to my suppliers and subtract that from quoted amount so they pay me for the labout and the general fixtures and fittings which I would supply. So for example:
I quote for a job £2500.00 to replace a boiler
I request a £200.00 deposit and ask them to pay for the boiler and some other expensive equipment directly to my supplier of which costs £1300.00. When the job is completed they then pay me £1000.00 which goes through my books.
This way I could avoid 40-60% of the total costs of the job going through me and reduce my turn over significantly allowing me to avoid the VAT threshold. Can this be done legally?
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi
Thanks for your question
Yes this can be done legally but you can then just charging for labour and the smaller materials costs.
You propose that you include within the quote the use of expensive equipment - which the customer then pays this element directly - but I am afraid that no matter how it gets paid , doing it this way forms part of your turnover, so you cannot include any of these costs within your quote.
So usuing example - you would need to instruct them what they need to supply directly - you then provide a quote for the labour and the smaller costs (so copper tubing - your blow torch gas etc) which also I assume you build in your travel costs etc - and this equates to the actual amount are paid.
So just the £1000 in the quote and that the customer arranges the materials directly with the supplier and you have no involvement with this at all - other than fitting it, for which you have charged the labour costs for.
Thanks
Sam
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