VAT and other random questions.

[Guest]

[TGS]

Hahaha! Yes 7aspire - I think I would.

Maybe I should make that my 10 year (dream) target.

Thank you for your replies.

[greenbarn]

you charge the guest 8% rather than 20% but can't claim anything back. (Stands back and awaits correction............. )

The flat rate for accommodation services is 10.5%, though reduced to 1% in the first year.

There's the correction! I hadn't even realised there were different flat rates for different types of business, but why would HMRC make things straightforward?

I think you would have to grow the business a fair bit to qualify for the Flat Rate Scheme (turnover of £150k needed).

I had to check that one as I remember the scheme being an aid for small businesses to minimise paperwork - but times change of course. However, it looks as though you can qualify for the flat rate scheme provided your turnover is under £150k.

This is an extract from this government website

VAT Flat Rate Scheme

1. Overview
Usually, how much VAT a business pays or claims back from HM Revenue and Customs (HMRC) is the difference between the VAT they charge customers and pay on their purchases.

With the Flat Rate Scheme:

you pay a fixed rate of VAT over to HMRC
you keep the difference between what you charge your customers and pay over to HMRC
you can’t reclaim the VAT on your purchases - except for certain capital assets over £2,000
To join the scheme your VAT turnover must be less than £150,000 (excluding VAT) and you must apply to HMRC.

Talk to an accountant or tax adviser if you want advice on whether the Flat Rate Scheme is right for you.

[Guest]

[TGS]

You guys are amazing!

I'm going to check those links in the morning - but it sounds like a plan....

[newtimber]

I think one of the reasons the owner was not renting out all the apartments and trying to get longer lets may be the VAT problem.
At the lower end of the market, it is going to be difficult to compete on price if you have to add 10.5% to your prices. You have more expenses than your competitors (you may not qualify for Small Business Rates relief, you have to pay cleaners/music licenses and comply with regulations and you're competing with the "sharing" economy) and the way the listing sites are now going commission, you can't save much by economies of scale.

If the previous owners aren't VAT registered, then you have no problems with VAT on the purchase as there won't be any.

Would it be possible to have some units on longer lets and some holiday lets and stay beneath the VAT threshold, qualify for Small Business Rates relief, whilst you see what the demand is?

[TGS]

Thanks newtimber.

The plan is to continue running it 'as is' for the first 8 months. Honouring bookings already made etc..
Meanwhile we create a great website, get on trip advisor, get online booking system in place etc..
All the while assessing as we go, which apartments need facelifts, the market and demand. I anticipate a very flexible few years. The exterior of the building is dated and not selling itself either.

Lots to think about, lots to do. Taking it over 'as is' should at least give the opportunity to feel our way. Rather than doing some grand relaunch.

Off to get confirmation of bookings at 11 and see the place again.

Then it's all cashflow forecasts and projections this afternoon. You may find me reading through old posts about when people book.

Have a great day everyone!