Can anyone explain to me about small business's who are not VAT registered.

[squirtle]

I have approached a local builder who has his own business to supply me an insurance quote for some work i need doing and they are hesitating because its an expensive job and they are not VATregistered.

Whats the difference with someone who is or isn't registered?

Why might they not want the work?

[philm09]

You only have to register for VAT if your business has a turnover of greater than �68K, maybe he does not want to take the job because it will put him over this threshold.

I would of thought most builders would turn over more than the VAT limit so to me this sounds like you might want to look for another builder.

[squirtle]

philm09

Ok thanks for that. However i only live in a small town and i say this guy has a business............its just him. So maybe his turnover isn't greater than �68k

So if he isn't VAT registered, but is self employed, I am guessing he still has to be responsible for paying his own Tax.

If he is making that much money - I am clearly in the wrong job.

[philm09]

If he is a sole trader/partnership he is responsible for his own tax, ni and everything else.

[sandmaster]

The VAT threshhold is nothing to do with the profit he is making - it is his turnover. If your job takes him over the threshhold he has to account for VAT on every job he has taken on this financial year - even jobs he has completed and has not charged VAT on. So it may not pay him to take on your job.

[squirtle]

Ok thanks everyone

I think I understand it now.

[Skyline D]

I doubt it has anything to do with taking him into a VAT registration, though I guess it's possible that has relevance.

More likely, if it's a big job, he's going to have to lie out the cost of an awful lot of materials that he has to pay VAT on himself and can't claim back (because he's not registered) and it's going to play merry havoc with his cashflow.

Quite simply he may not want the job because it's out of his league (and insurance jobs are notorious for taking a while to pay out). If I'd a fiver for every perfectly good business that went under because it tried to do things it wasn't big enough to do I'd be a rich man.

[Maypole]

Completely agree with skyline, although if the builder really wanted teh work Id have thought he would have negotiated stage payments to help with the cashflow.

[Skyline D]

I doubt he'd get stage payments from an insurance company. Opening post makes it clear this is an insurance job.

[Markandshez]

Quite simply, if your job takes him over the �68k threshold he will have to charge the extra 15% for every job he does. If his customer base is mainly the public this might have a massive effect on whether he gets a job or not.