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 Post subject: Tax on fares.
PostPosted: Thu Oct 23, 2003 10:54 pm 
Hello all.

My accountant has said that on my account work I should charge VAT. Now I only do a few account jobs a week, and it's all done on the meter.

But the council says that I can't charge more than the meter, so do I have to absorb the VAT in my costs?

Thanks Charlie


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 Post subject: Re: Tax on fares.
PostPosted: Fri Oct 24, 2003 2:48 am 
Charles wrote:
Hello all.

My accountant has said that on my account work I should charge VAT. Now I only do a few account jobs a week, and it's all done on the meter.

But the council says that I can't charge more than the meter, so do I have to absorb the VAT in my costs?

Thanks Charlie


first of all tell your accountant to see a taxidermist!

your council is wrong as well glad to say, account work has f*** all to do with them and you realy should not be asking them, its a stupid thing to do!

would you be daft enough to ask customs and excise if you should be charging vat.?

glory be

Wharfie


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 Post subject:
PostPosted: Fri Oct 24, 2003 6:27 pm 
Lets be a bit more explanatory to Charles shall we Wharfie.

Charles

The actual answer depends on how your business is structured and the way you account for money in your company.

It is a very difficult subject to explain and it seems different companies benefit from different interpretations depending where you are in the country.

If I was to give my perspective I am certain that within minutes 5 or 6 people would disagree with it. They would also disagree with each other.

I would say the basics are that if you employ drivers or provide them with cars on a split fare basis then you are likely to have to charge VAT. However if you have an agreement where you are simply acting as an agent for the owner drivers and invoicing account work on their behalf then you may get away with exemption. However you must then charge VAT on you fees to the drivers.

Who wants to disagree, please feel free.


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 Post subject:
PostPosted: Fri Oct 24, 2003 8:25 pm 
Tom Thumb wrote:
Lets be a bit more explanatory to Charles shall we Wharfie.

Charles

The actual answer depends on how your business is structured and the way you account for money in your company.

It is a very difficult subject to explain and it seems different companies benefit from different interpretations depending where you are in the country.

If I was to give my perspective I am certain that within minutes 5 or 6 people would disagree with it. They would also disagree with each other.

I would say the basics are that if you employ drivers or provide them with cars on a split fare basis then you are likely to have to charge VAT. However if you have an agreement where you are simply acting as an agent for the owner drivers and invoicing account work on their behalf then you may get away with exemption. However you must then charge VAT on you fees to the drivers.

Who wants to disagree, please feel free.


yes I now see where you are comming from,

consider, if you own a taxi buisness, you either pay vat or you do not, you cannot collect vat, and pay vat on accounts, and disregaurd the cash takings.

according to my calculations the difference bettween a vat buisness and a none vat buisness is about 10% when reclaiming on invoices is taken into consideration.

Wharfie


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 Post subject:
PostPosted: Fri Oct 24, 2003 8:48 pm 
Hello all (bar Wharfie) :cry:

Thanks for the info. I think I will just keep on doing what I'm doing and plead stupidity.

Or say it was Wharfie who told me to break the law. :D


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 Post subject:
PostPosted: Fri Oct 24, 2003 9:00 pm 
Charles wrote:
Hello all (bar Wharfie) :cry:

Thanks for the info. I think I will just keep on doing what I'm doing and plead stupidity.

Or say it was Wharfie who told me to break the law. :D


yeh do that!
blame me!
everybody else does!

Wharfie

ps I have not told you anywhere to break the law, and which law are you saying I am telling you to break?

Wharfie


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 Post subject:
PostPosted: Mon Oct 27, 2003 10:08 pm 
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Tom Thumb wrote:
I would say the basics are that if you employ drivers or provide them with cars on a split fare basis then you are likely to have to charge VAT. However if you have an agreement where you are simply acting as an agent for the owner drivers and invoicing account work on their behalf then you may get away with exemption. However you must then charge VAT on you fees to the drivers.

Who wants to disagree, please feel free.


Yes, I would agree in general terms, of course it would depend on being over the VAT threshold - in my manor, for example, there are a few people who run a handful of cars but won't expand so to ensure they keep below the VAT threshold.

As for the agency concept, again in my manor I think that the VAT aspect was a major factor in moving from company-owned vehicles to an agency agreement - if each individual only runs one or two cars then this keeps the fares out of the ambit of VAT.

I think there are people running three or four cars in my manor without being VAT registered. Since the VAT threshold is £65k turnover this may surprise some of you, but don't ask me how they get away with it!!

Dusty


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 Post subject: Re: Tax on fares.
PostPosted: Mon Oct 27, 2003 10:13 pm 
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Joined: Wed Sep 03, 2003 4:20 pm
Posts: 3378
Charles wrote:
My accountant has said that on my account work I should charge VAT. Now I only do a few account jobs a week, and it's all done on the meter.

But the council says that I can't charge more than the meter, so do I have to absorb the VAT in my costs?



But going back to Charle's original question, it would appear to be implying that he is liable for VAT, therefore any income he has will include a VAT element.

Therefore for hackney work, since you can only charge the meter, then as you say you will have to take the hit.

As for pre-booked work, then presumably you can charge whatever you want as long as it's agreed with the customer.

But if your customer won't pay any more than the metered rate then your position is the same as with the hackney work.

Dusty


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 Post subject:
PostPosted: Mon Oct 27, 2003 10:56 pm 
Our council have it stated on the HC tariff card that vat is included in the price. So if you are vat regstered (about 1%) then you lose out. If you are not vat registered (about 99%) then its makes no difference.


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 Post subject:
PostPosted: Mon Oct 27, 2003 11:27 pm 
99% of Account customers are in a position to reclaim the VAT.

So adding it onto the invoice should have no effect on them.

Burying your head in the sand is NOT the answer. If you are going to continue to act 'incorrectly' at least be clearly prepared and make sure your proceedures have enough ambiguity to look convincingly 'stupid'.


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 Post subject:
PostPosted: Mon Oct 27, 2003 11:33 pm 
But if your fares include vat then the customer is fully entitled to claim it back. I think the problem is when the driver is vat registered and has to give the vat to the vat man.
Thus he loses out compared to his mates who dont.


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 Post subject:
PostPosted: Mon Oct 27, 2003 11:57 pm 
Charles initial post says that 'his accountant says he should charge VAT on his Account Work'.

From this I gathered that Charles was an Operator not an individual driver.

My answer was based on that assumption.


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 Post subject:
PostPosted: Tue Oct 28, 2003 3:13 am 
Dusty Bin wrote:
Tom Thumb wrote:
I would say the basics are that if you employ drivers or provide them with cars on a split fare basis then you are likely to have to charge VAT. However if you have an agreement where you are simply acting as an agent for the owner drivers and invoicing account work on their behalf then you may get away with exemption. However you must then charge VAT on you fees to the drivers.

Who wants to disagree, please feel free.


Yes, I would agree in general terms, of course it would depend on being over the VAT threshold - in my manor, for example, there are a few people who run a handful of cars but won't expand so to ensure they keep below the VAT threshold.

As for the agency concept, again in my manor I think that the VAT aspect was a major factor in moving from company-owned vehicles to an agency agreement - if each individual only runs one or two cars then this keeps the fares out of the ambit of VAT.

I think there are people running three or four cars in my manor without being VAT registered. Since the VAT threshold is £65k turnover this may surprise some of you, but don't ask me how they get away with it!!

Dusty


OK Dusty I will tell you,
car one drivers name
car2 Wifes name
car 3 Partnership.
car4 limited company,

go any further and they crawl all over you.

Wharfie


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 Post subject:
PostPosted: Tue Oct 28, 2003 1:01 pm 
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Joined: Wed Sep 03, 2003 4:20 pm
Posts: 3378
Yes, but I think the ones I was talking about are all in the same name :?

Anyway, isn't there anti-avoidance rules to prevent the sort of thing you're talking about.

This is another discussion I think we had recently :?

Dusty


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 Post subject:
PostPosted: Fri Oct 31, 2003 11:18 pm 
Tom Thumb wrote:
Charles initial post says that 'his accountant says he should charge VAT on his Account Work'.

From this I gathered that Charles was an Operator not an individual driver.

My answer was based on that assumption.


Sorry if I didn't make that clear Tom. I do work on a circuit, but have one or two private airport accounts.

Thanks everyone for the info.

Charlie


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 Post subject:
PostPosted: Sat Nov 01, 2003 12:45 am 
In that case Charlie

GET A NEW ACCOUNTANT


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 Post subject:
PostPosted: Sat Nov 01, 2003 4:31 pm 
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Joined: Wed Sep 03, 2003 8:30 pm
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Location: 1066 Country
I suspect he is cheap. :wink:


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 Post subject:
PostPosted: Sat Nov 01, 2003 9:46 pm 
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Joined: Sun Sep 21, 2003 1:04 am
Posts: 725
Location: Essex, England
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.

_________________
There is Significant Unmet Demand for my Opinion.


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 Post subject:
PostPosted: Sun Nov 02, 2003 3:41 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 1:55 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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