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PostPosted: Fri Oct 31, 2003 11:45 pm 
In that case Charlie

GET A NEW ACCOUNTANT


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PostPosted: Sat Nov 01, 2003 3:31 pm 
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I suspect he is cheap. :wink:


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PostPosted: Sat Nov 01, 2003 8:46 pm 
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If your gross take is over £1,000 a week, you could well be getting close to compulsory registration. It isnt a choice.

In our area, Owner drivers (generally grossing under £1,000 a week) dont need to register. But, as an operator with a turnover in excess of the threshold one does need to register.

As to whether the fare is VATable or not, depends on the contractual arrangement between the parties.

If a non-registered owner-driver charges a customer a cash fare, then it is usually held that the contract exists between the owner-driver and the customer, thus no VAT is applied.

If the owner-driver does an account fare, that is invoiced not by himself but by the operator on whose circuit he operates, then the contract is between the operator and the customer, and as such, is liable to VAT as the operator is a `registered person'.

If you get two owner drivers, one who takes more than £1000 a week, and one who takes just under a £1000 a week, then the non registered driver is better off, as he doesnt have to pay 14.89365% of his gross take to the VAT man. While he can offset VAT reclaimable expenses such as fuel from his output tax, the truth is in the cab business that only about 20/30% of ones costs are VAT reclaimable in the first place. That leaves you with a problem. You cannot charge extra on your fares for VAT when running on the meter, as the metered rate is usually regarded as gross, so overall, you have just lost around 10% (as Wharfie said) of your income to the VAT man.

To my mind, this is bang out of order, as, you are as much of a public service as a nine seat transit operating on a PCV licence is, yet they are exempt from VAT. How fair is that?

At the end of the day, if your take isnt more than the £55,000 a year threshold (or whatever it is these days) then there is no way on the face of this earth that you want to voluntarily register for VAT. Not in the taxi business.

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PostPosted: Sun Nov 02, 2003 2:41 am 
Andy7 wrote:
If your gross take is over £1,000 a week, you could well be getting close to compulsory registration. It isnt a choice.

In our area, Owner drivers (generally grossing under £1,000 a week) dont need to register. But, as an operator with a turnover in excess of the threshold one does need to register.

As to whether the fare is VATable or not, depends on the contractual arrangement between the parties.

If a non-registered owner-driver charges a customer a cash fare, then it is usually held that the contract exists between the owner-driver and the customer, thus no VAT is applied.

If the owner-driver does an account fare, that is invoiced not by himself but by the operator on whose circuit he operates, then the contract is between the operator and the customer, and as such, is liable to VAT as the operator is a `registered person'.

If you get two owner drivers, one who takes more than £1000 a week, and one who takes just under a £1000 a week, then the non registered driver is better off, as he doesnt have to pay 14.89365% of his gross take to the VAT man. While he can offset VAT reclaimable expenses such as fuel from his output tax, the truth is in the cab business that only about 20/30% of ones costs are VAT reclaimable in the first place. That leaves you with a problem. You cannot charge extra on your fares for VAT when running on the meter, as the metered rate is usually regarded as gross, so overall, you have just lost around 10% (as Wharfie said) of your income to the VAT man.

To my mind, this is bang out of order, as, you are as much of a public service as a nine seat transit operating on a PCV licence is, yet they are exempt from VAT. How fair is that?

At the end of the day, if your take isnt more than the £55,000 a year threshold (or whatever it is these days) then there is no way on the face of this earth that you want to voluntarily register for VAT. Not in the taxi business.


Andy where did you get that from about a nine seater? beccause I am told 9seats and under vat over 9 none

Wharfie


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 Post subject:
PostPosted: Sun Nov 02, 2003 12:55 pm 
I think Andy was refering to Passenger seats Wharfie.

Andy, I am aware of some operators who undertake the invoicing of Account customers as a 'service' to the drivers, sending out invoices on behalf of the drivers. By structuring their systems this way they send out invoices without VAT.

The secret of all this is to ensure that you have 'good' professional advice. As Charlie's example shows, many in this trade insist on cheap and end up with crap.

From my position, when your company's vast majority of income is from Corporate Accounts rather than cash work off the street the ratio swings much further to a neutral position. Especially if you reclaim the VAT on your car purchases.


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PostPosted: Sun Nov 02, 2003 4:25 pm 
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Location: Essex, England
I cannot actually remember refering to the number of seats. However, I dont think the number of seats are solely relavant to VAT.

As I see it, any PSV work is zero rated, even if you do it in a saloon car. Just as long as the car is PSV licensed, and you are charging separate fares, and operating a bus route.

To move on to Tom's comments, I too have heard that Invoicing on behalf of the drivers can avoid VAT, but only if the Invoicing is done in the drivers name. When invoicing in the circuits name, I would imagine that most circuits are over the VAT threshold and thus must account for VAT. It seems to depend on what area you are in, as to how Customs interpret the regulations.

As to reclaiming VAT on vehicle purchases, this is OK if the car is new, or is a qualifying vehicle sold with VAT, and thus OK for the big firms, but as a percentage on say a single owner-drivers margins, I doubt it would make a difference as to whether it was worth registering.

To me, VAT is a real pain in the Butt. We have owner-drivers, rental drivers, and employed on PAYE drivers, and it makes it a nightmare doing the percentage calculations and accounting for VAT on the firms share.

For example: A driver rents a car (60-40 split). The drivers share of take is not VAtable, as because the fare was between him and the passenger there is no VAT on the fare. But, there is VAT on the percentage of rent, which has to be swallowed by the circuit, as, because the driver is not registered for VAT, cannot be reclaimed by him. Thus, we account for VAT as "inclusive in the circuits percentage rental.

Then, with the account work, as we pay the drivers (they take it out of their cash take) we must VAT charge the customer on the full fare because the contract is between us and the customer for the account jobs.

Then, with the PAYE drivers, we must account for VAT on all fares, as again the contract is between us and the customer, not the driver.

The sooner we can go all owner-driver or all employed driver the better in my view, but the trouble is, the drivers dont want it. They all want to stay exactly as they are!!!! Such is life. :(

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PostPosted: Thu Nov 13, 2003 11:52 am 
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Andy7 wrote:
The sooner we can go all owner-driver or all employed driver the better in my view, but the trouble is, the drivers dont want it. They all want to stay exactly as they are!!!! Such is life. :(


The thing is if we all go employed drivers, then the operators will have to risk assess this, and risk assess that. Would they be able to send drivers out at night, without a safety screen?

Then we have the 48 hour week, who many of us work that or less. I doubt many.

Alex


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PostPosted: Thu Nov 13, 2003 12:02 pm 
Alex wrote:
Andy7 wrote:
The sooner we can go all owner-driver or all employed driver the better in my view, but the trouble is, the drivers dont want it. They all want to stay exactly as they are!!!! Such is life. :(


The thing is if we all go employed drivers, then the operators will have to risk assess this, and risk assess that. Would they be able to send drivers out at night, without a safety screen?

Then we have the 48 hour week, who many of us work that or less. I doubt many.

Alex


yes but the good old master servant relationship comes back to the fore
them were the days!

Wharfie


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PostPosted: Thu Nov 13, 2003 12:13 pm 
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Location: Miles away from paradise, not far from hell.
Yes my Lord. :D

Alex


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PostPosted: Mon Feb 09, 2004 11:29 pm 
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Charles,

Presuming you are above the VAT limit you would appear to me to have a number of options.

1, Make each fare inclusive of the VAT, as charged to cash customers.

2, Make each account job the metered fare plus VAT

3, Only charge VAT on any profit made.

Options 1 & 2 are easy to work out, with the prefered option being number 2 as its easy to invoice.

Option 3 is sensible if your a company and you hire radios or cars out, for which I will do an example.

Metered Fare £20.00

Commission 10% £ 2.00

VAT@17.5% £ .35 (Based on profit made from job)

Total Invoice £22.35

You also have the option of deducting a percentage from the owner driver, although this may not be popular, but if you do take say 10% from him remember that it includes VAT

Regards

Captain Cab


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PostPosted: Thu Feb 19, 2004 9:14 pm 
As a little aside to all this, I have noticed that some of the software packages available on the market to taxi companies, do not properly account for the VAT.

Some refer to cash jobs as being exempt or outside the scope of VAT. This is NOT the case.

In a firm where, for example, the driver rented the car for 60% of the gross take, keeping 40% for himself, then the remaining 60% contains VAT at the normal rate. (Ie. 14.89365% inclusive).

The software firms do not seem to account for the VAT on the remaining 60% so you have to calculate it yourself after it has been transferred to Sage Line 50 or whatever.

If that VAT is not accounted for, then you could face a very large bill from Customs and Excise if they ever do an in-depth audit.


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 Post subject:
PostPosted: Fri Feb 20, 2004 11:12 am 
According to Sussex Man we don't pay tax :? :? :? :?


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 Post subject:
PostPosted: Sat Feb 21, 2004 2:32 pm 
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Location: Essex, England
And of course, you declared all your tips last year, didn't you Nidge.

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 Post subject:
PostPosted: Sat Feb 21, 2004 9:14 pm 
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Location: The Global Market
Tips, what are they?

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PostPosted: Mon Feb 23, 2004 3:34 am 
There are now simplified rules for VAT.
A flat rate has been set for the taxi trade you pay a percentage of your gross turnover around 10%. No input tax, output tax calculations, just one annual calculation.
Charge VAT where appropriate, commercial customers and charge inclusive ie, meter rate on cash work and personal accounts. The is a limit on the turnover, about £500k, this scheme is designed to help small businesses expand. Ask a decent accountant or go to Customs And Excise web site. My local VAT office was very helpful.
Being VAT reg opens the door to a lot of corporate customers.

It's all good.


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