Taxi Driver Online

lol sussex, i got to, I dont know about you

Captain cab

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Think of how stupid the average person is, and realize half of them are stupider than that.
George Carlin

we are vat registred and pay approx 11% of what we gross to the taxman after claiming back fuel etc and you can only claim the vat back on a new vehicle at 100% but smaller companies who arent vat registred are definetly better off all meter fares are vat inclusive so there should be 2 tarriffs one for vat drivers one for those not vat registred that should make for a good laugh

Right let me see if I got this strait,company's who dont reach the vat threshold cannot claim back the vat and there is no vat shown on the meter, Company's who are over the threshold can claim it all back, but there is still no vat shown on the meter, So 2 cars doing the same job for Mr Vatman and the meter say's £5.00 in both cars, car1 does not claim back vat as he is below the threshold, car2 can claim the vat back but nothing is showing on the meter other than the £5.00 so the vat regiserd car2 will loose out,and only recive£4.125 of the fair, but at the end of the year he will be quids in as he can claim back the vat on everything to do with the buisness, while car1 will be totaly out of pocket.
Well all I can say is start telling the vatman to go buck himself and give back the vat to all

The first half of your analyis is correct Skippy, but the problem with the second half is that you are assuming that you will be able to reclaim a huge wadge of VAT, which is not normally the case.

If you are VAT registered then the fare is deemed to include the VAT element, so you are correct, on a £5 fare the driver collects around 75p for the VAT man.

The unregistered driver will keep the whole £5.

But the registered driver can reclaim VAT on his outgoings, but the point to remember is that this will be a lot less than the VAT payable, so the unregistered driver will still be better off keeping the whole £5.

For example, the registered driver will be liable for the 75p VAT, but the VAT he can reclaim back will probably only about 20-30p or so.

So from the £5 he pays the VAT man the 75p from the fare less the 20-30p VAT reclaimable on his expenses.

So at best he will pay the VAT man 45p from the £5 fare, whereas the unregistered driver will of course have kept all of the £5 fare.

By the way, does your nickname related to the Bush Kangaroo?

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Taxi Driver Online
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That sounds about right, but clearly you couldn't have two HCs charging different rates from the rank, unless it was made clear to punters which was which, in which case they would obviously take the unregistered one under normal circumstances.

Of course, PH firms can raise there fares to compensate for the VAT, but then again they have to consider that they might lose business to non-registered operators.

But then this is what happens in any other business sector.

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Taxi Driver Online
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the comment about 2 tarriffs was tongue in cheek but you are spot on about the vat companies that are vat registered and try to do the job properly are approx 11% worsr off

i had his problem a few years ago with my previous business, i was doing well until i went over the VAT threshold, i would have priced myself out of the market if i added an extra 17.5% to my prices so had to take the dip in profits myself.

i think skippy is getting confused with what part of the VAT you can claim back. the VAT which is included within the cost to the customer is 100% payable to the VAT man. you can only claim back the VAT on things that you purchase in connection with the running of you business. so if you have 100 fares that give you 5 quid each you get the 412.50 the VAT man gets the 87.50. lets say you spend 50 on fuel to earn that money, you can then claim back 8.75 on the fuel and the VAT on any other expenses, you can claim that 8.75 back from the 87.50 you still have to pay the VAT man.

but if you are below the VAT threshold you keep the 87.50 but then cant claim back the 8.75 from the fuel etc.

personally i find VAT very confusing and i'm glad i now work in a trade where im unlikely to find myself over the VAT threshold again.

HA HA, yes I thought you were taking the mick, but on an earlier forum we had a hugely involved debate about this issue and why VAT-registered drivers should not be able to charge more, so I just included that bit in case anyone thought it was a good idea

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Quite right steveo, I think that if you are just over the threshold then you will end up worse off than when just under it, so I think that many in the trade will only go put 5 cars on rather than moving from 2 to 3 (say) since it wouldn't be worth their while just putting another car on because this would put them over the VAT threshold and thus the extra car would only make them marginally better off, whereas if they put an extra 3 on then the extra profit would offset the loss incurred by being liable for VAT.

On a pedantic note, there's a slight discrepancy in the example figures provided by yourself and skippy.

You are calculating the VAT as 17.5% on the gross fare, whereas in reality its 17.5% of the fare before the VAT.

You can find out how much the VAT element on a gross figure is by multiplying it by 7 and dividing the total by 47 [eg (£5 x 7)/47].

For example, I've got a £20 petrol receipt in front of me.

Using your method the VAT would be £20 x 17.5% = £3.50, whereas in fact the VAT is shown as £2.98.

However, if you use my method you get (£20 x 7)/47 = £2.98

Thus the petrol receipt shows the net figure to be £17.02 and the VAT to be £2.98, clearly totalling the £20.

So if you multiply the net figure of £17.02 by the 17.5% you get the VAT figure of £2.98, totalling £20.

So if the figure is net of VAT then you can use the 17.5% to get the amount of VAT.

But if the figure is gross (as in taxi fares) then you multiply the figure by 7 then divide by 47 to get the amount of VAT (ie multiply by the fraction 7/47).

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