Posted by TimJ on Tue Jun 1 14:59:29 1999
In Reply to: Re: VAT posted by Myles on June 01, 1999 at 13:59:22:
| Distribution: | paneris@paneris.org |
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>>TimJ just sprung something on me, with a potential solution.>>He became VAT registered some time ago, and assures me that I will need to in the near future.
>>Up until now the Paneris internal rate has been 32gbp,
>>ie 80% of 40gbp.>>TimJ now informs me that for him the price has VAT on top.
>Eh? If you get a contract and work out that the hourly rate
>is £40 () then you take 10% management fee and 10%
>finder's fee, leaving a £32 for developers. If that developer
>is VAT registered then they will get £27.23 for themselves
>and £4.77 for the taxman. Why isn't this right? How can a
>developer charge more than the hourly rate for each hour?umm,
everyone else who contracts hoop get charged £40 or £32 per hour (ex VAT). This obviously makes it more expensive for non vat registered people/companies. VAT reg people will be able to offset the vat against services they supply. As you point out, this plays havoc with the money split for paneris.
>OK, I've just twigged. When TimP is VAT registered then rather
>than keeping the whole amount of VAT for the project in his
>special bank account, he can pass on the VAT associated
>with TimJ's payments to him to pay, in which case TimJ gets
>17.5% more than me. But what happens when TimP isn't registerd, like now. Does the scenario above still apply?well..
>>To get around this, and not give the VATman the difference,
>>he suggests a barter register for trading between VAT registered and non-VAT registered members.>Seems OK so long as we work out when these accounts will be
>settled. I am not VAT registered and have not, so far, used
>anyone else on my (small) projects, so I'm not sure how much
>I would use it. This is another way of saying that I would
>need to be paid for project work, rather than have it chalked up on the slate :-) But obviously, things can change!this seems the best mechanism to avoid giving the vat man money.
i would suggest that accounts should be settled at the year end (05/04). one question, will these time credits be caclulated in hours or in time? To illustrate the dilema:
i work for timp for 10 hours on a project that pays £22 per hour (ie PFE). Later in the year timp works for 10 hours for me on a project that pays £32 per hour.
under the credit scheme, are we even, or do i owe timp £100?
>>This seems like a useful addition to the PMS.
>>What do you think?
>Sounds cool.
there are another couple of mechanism to consider:
1) one i have used with keith when i was not vat registered. was to split the vat between us (paying 8.75% each). this is not too clever as the vat man still gets paid. rather this just spreads the burden.
2) for projects where some of the time is vattable (ie where i am involved), hoop could do the billing (and therefor add vat to the entire amount). This is not very clever as it will increasingly look like hoop is employing everyone else with disasterous tax consequences.
3) everyone who brings in work gets vat registered. this may happen soon anyway, as the limit you can earn without being is about £40K. being vat registered is actually a good idea (even if you don't earn £40K). it means that all bills and expences are effectively 17.5% cheaper (think of you phone bill, computer kit etc). the only difficulty is that you have to make sure your accounts are up-to-date quarterly (and be able to run a simple report in quicken, fill out a form and write a big cheque) - not too much trouble.
my favorite option is number 3, but we can use a credit scheme until you guys get registered (after that we can settle without loosing out).timj