The Business Exchange Swindon & Wiltshire Edition 36: April/May 2018 | Page 9

FINANCE HOW TO DELAY BEING VAT REGISTERED VAT registration is a problem facing small businesses (such as builders; car mechanics and domestic cleaning companies etc.) which make sales, principally, to the general public. When their annual turnover exceeds £85,000, they must register for VAT and then pay 1/6th of their gross sales to HMRC. However, there are ways of avoiding or delaying VAT registration: DELIBERATELY RESTRICT ANNUAL TURNOVER TO LESS THAN £85.000 Some businesses restrict their annual turnover to below £85,000, to avoid VAT registration, by refusing to accept new customers; or by taking longer holidays when they don’t trade. This does sound quite drastic – but it does prevent a big step backwards in profit. INCORPORATE THE BUSINESS INTO A LIMITED COMPANY If a sole trader (or Partnership) – selling goods or services to consumers – is getting close to the VAT threshold of £85,000, they can transfer the business to a Limited Company. This resets the VAT turnover to zero – buying a lot more time before having to compulsorily VAT register, and possibly saving up to £14,000 in VAT. It’s important to be aware of one’s rolling 12 month turnover figure because if the threshold is exceeded, the business will be forced to register for VAT, and the registration would automatically be transferred to the Limited Company. SPLIT THE BUSINESS INTO TWO OR MORE BUSINESSES Splitting a business into two separate trading entities (generally new Limited Companies) where one or both are below the VAT threshold, makes it possible to save a lot of VAT. However, if the split is artificial, HMRC can, and will, treat all sales as being for one business for VAT threshold purposes. So it’s important that the separate businesses are autonomous, with separately identifiable costs. For example, one cannot break a business into two if they use the same staff, premises, marketing literature/website etc. And it is vital to have sound reasons why one might split up a business – perhaps for geographical reasons, or because products or services are developed for a new customer market. Peter Bromiley ACA Partner at AMS Accountancy Ask AMS Advice for small businesses AMS Accountancy Ltd. 01793 818400 2 good reasons to submit your Income Tax Return early! From April, HMRC will be issuing 2017/2018 Income Tax Returns. There are 2 good reasons to be ahead of the game and submit your Tax Return early: 1. You will see your tax liability well in advance and have time to save for it. 2. If you are due a repayment, you will receive it sooner. See AMS early bird offer for completing and submitting Income Tax Returns from £96.50 +VAT Visit www.ams-accountancy.co.uk Personal Tax page - Self Assessments 60+ videos on YouTube. ‘Ask AMS Accountancy’ @AMSAccountancy www.ams-accountancy.co.uk GROWTH FOR LOCAL ACCOUNTANCY FIRM The team at Purple Lime, based out of Hartham Park in Corsham is growing with two new members coming on board in recent weeks and more clients embracing a modern and fresh approach to accounting. It was more than a year ago co-founders Angela Ashworth and Oli Thomas came together to set up Purple Lime – offering a small business outsourced flexible finance department using Xero cloud technology. They brought with them many years of experience in accountancy, financial management, payroll, VAT returns, book-keeping, tax compliance and anything to do with the financial health of a business. Purple Lime has also become a silver partner with the national Xero brand. Oli Thomas said: “We are thrilled to be so busy so early on in our journey – and are grateful to our clients and contacts for their support and enthusiasm. It’s been amazing how quickly companies are recognising the value of our fresh approach to accountancy.” One company which is supportive of the ethos of Purple Lime is Ace Marquetry of Marlborough. The company was established in 1986 and their work can be found on furniture all over the world. The new generation has taken over the company and their need for a more digital response when it came to live financial data became clear. Oli said: “While the business is very niche and traditional, it faces the same issues many small businesses face. The directors felt it was crucial to get to grips with the financial picture. Not being financially trained themselves they wanted the confidence of knowing their financial picture was up to date and accurate at all times so they could look forward and plan how to develop the business over the coming year.” Purple Lime took over their accounts using the Xero platform and set up – and trained the directors – on ReceiptBank which is compatible with Xero. The Ace Marquetry team now receive a monthly management report with an executive summary along with other important data so they can track their performance against their business goals. Director Bethan Englefield said: “This was a huge decision for us as we needed to have the confidence that whoever we chose to work with was the right fit for our business.” If you believe the need for ‘once a year’ compliance is out of date – call the team for a no-obligation conversation. For more info: www.purplelime.uk.com 01249 691360 [email protected] THE BUSINESS EXCHANGE 2018 9