Foreign.

And welcome to the Pat Accounting Podcast with me, your host, Vicky Clark.

I'm going to help you get to grips with your finances, save you lots of money and take the stress out of doing your tax return.

So let's get going today, guys.

We're going to be talking about that that everyone hates, but it's very, very important topic and I was looking through the podcast and we haven't done one for like over a year and obviously little things have changed since that time.

So we just thought we'll do an informative one today and go through the different types of art and what clients say about the VAT, etc.

Etc.

Why you shouldn't be afraid of it.

Exactly, because it's not, it's, it's.

It's a milestone that you, you should be aiming for rather than a milestone to be avoiding.

But we can go through some stories that we've had over the last few months and a couple of years and hopefully answer any questions that you guys might have.

And like I say, if you do have any burning questions and please just put them in the comments or, you know, if you're listening to this on the podcast, then feel free to find it in the group and then put it on the question on the comments.

But it will get deleted after 30 days, so you'd have to be glad.

So if you listen to this after 30 days.

Well, you look sad because can't answer the question, so.

Right, I'm nearly there.

Let's just send it in on the back of a postcard.

Yeah, just.

Yeah, send us a postcard or a DM or anything of the above.

If you're just listening to us or watching us for the first time.

We are accountants and we work in the pet industry and have done for the last few years now and we help pet businesses all across the uk.

So that's who we are.

And we do a live every week.

Sometimes we have guests.

Yeah.

Next.

The next two weeks we've got guests on actually, so that's good.

Just to mix it up a little bit.

And then we just do some tax topics that are hot at that time or relevant to the time of month or, or just ones we think we need a bit of a recap on, which is why we're doing the VAT one today.

So where are we going to start with the vat?

Do you do the technical bits first?

One of the biggest changes behind the VAT is that the VAT registration threshold has changed.

So, you know, last year when we spoke about it, it was at a different rate.

It changed towards the beginning of this, this year and now you can earn £90,000 and roll each role before you had to register for that.

So, you know, it, it, it rose up from the, the previous threshold.

And so that has given everybody a little bit of a boost and you can earn a little bit more before you have to.

To register for that big boost, though, really, isn't.

It's quite small.

Yeah.

But nevertheless, it's now 90.

Now is 90 within a rolling 12 months.

So it's not April to April every year.

You have to look at your VAT turnover every single month once you've recorded all your sales and you're looking at the last 12 months.

And if you're at 90, then you have to register for that.

And if you think you're going to hit the VAT threshold within the next 30 days again, you have to get that VAT registration in with hmrc.

So that pretty much sums up when to register for vat.

But can I just say, though, because you mentioned a very good point.

People, people always think when they're looking at the vat, someone's dogs are kicking off, that they do April to April and attacks here and it's caught so many people out that are like, well, no, from April to April I only earned like 79 grand or something.

But actually they haven't done the road in 12 months.

So just make sure, guys, that you do do the role of 12 months and you don't think it is just the tax years, because it's not.

And so that's really, really important one just to take away with you because it catches a lot of people out.

And just be careful as well, if you're using the cash flow calculator on Free Agent, for argument's sake, that shows you what you've got in and out of your bank over the last 12 months.

That's money that you've also put in personally and taken out personally, so that will throw your figures.

So what you're actually looking for is your Vatable turnover within those 12 months.

And so it's not, it's not about the money that goes into the bank or the cash that you take.

It's a, it's only, you're only looking at the turnover that would be considered for VAT purposes because some, yeah, some.

People have used that cash flow on Free Agent as a guide and lightly said it's, it's not accurate.

Yeah, yeah.

So you, you can have more than £90,000 of cash flow into your bank account account.

But not all of that is being derived from sales, which is why that becomes a little bit inaccurate when you look at things.

And so you really need to look at the turnover of the business and just consider the things that would be relevant for that, which is generally your day to day sales, which you can.

Get on a report on most softwares.

If you are on software, then have a look and double check if you think you're nearer that 90 grand mark.

And then obviously the deregistration threshold has changed as well, hasn't it?

It has.

So the deregistration threshold again rose up slightly.

So you can now deregister when you hit £88,000 in a rolling 12 months.

Now, we've got to be a little bit careful with that because once you go VAT registered, we look at the net figures within your accounts.

Before you go VAT registered, it's the gross figures.

So that's 88,000 needs to be your gross turnover.

So actually your VATable turnover needs to be a little bit lower than that again.

So by the time you added that back on, it needs to be less than the 88,000.

So that does slow the deregistration process down slightly and it does catch a couple of people out.

But if you imagine that you do, if you hit 88, you DE registered for VAT, your gross sales go back in and automatically you're back over the £90,000, you go register again.

So just bear that in mind if you are thinking about DE registering for vat.

Fabulous.

So there we go, a few tips.

And obviously we deal with a lot of VAT registered clients and it's important to know which VAT scheme that you're going on, because again, I think a lot of people take advice randomly off the Internet, which is not necessarily going to be correct for you.

So again, it might be worth us just touching on quickly, the standard rate VAT and flat rate VAT scale schemes that people, I mean most people go on the flat rate, but it would be useful just to go through both and very briefly, just so people know which ones to sort of look for.

So when you register for vat, you have a couple of options in the type of VAT scheme that you want to join.

The standard rate VAT scheme is where you will pay 20%, or rather you will collect 20% of your sales from your customers and pay that over to hmrc, less any of the VAT that you have to pay on your expenses related to your business.

So you pay the difference then over to HMRC on a quarterly basis.

It can be done monthly, it can be done annually.

I wouldn't recommend those two schemes purely and simply because of the administration burden and the cash flow burden.

So generally when we talk about VAT it's always done on a quarterly basis.

And if you think, oh, I'm going to go on the VAT bit on the annual flat rate scheme, so I only have to pay one payment to HMRC in VAT a year, it doesn't work like that.

You still have to make multiple payments, but you just have to do one VAT return which is very, very different.

And you may overpay the vat, you may underpay the VAT and then you've got a difference to make up.

So the annual scheme is not something that we would recommend anybody look at.

Always go quarterly and if you really wanted to, you could do it monthly.

But again, give yourself a little bit of a buffer, go quarterly, have that time to get the VAT together.

You've got 30 days, or rather it's 30 days plus seven after the, the, the, the VAT return has been submitted.

So it's always around about the seventh of the, the month after your, your, your VAT's due that you would need to pay HMRC anyway.

So you've got a little bit of a buffer to, to collect some money if you didn't have enough in your VAT pot ready to pay over.

Now that scheme that, that we have the type of client that would go on that is somebody that buys and sells a lot of product based things.

So this could be pet stores, raw food dogs, stockists.

And the reason being is, is that they're able to reclaim the VAT on the products that they buy.

And because that is the majority of their business, there's a lot of that to be playing.

Now raw dog food if sold to working dogs is zero rated.

That, that's how you sell it onto your clients.

But if you, if you're advertising that as normal to, you know, could be used for normal dogs or pets, then just because you buy it at zero rated, you have to sell it at 20%.

It all depends on who you're selling it to, would dictate the VAT that you have to sell it at.

So just be careful with, with raw dog food, certainly for ones that are designed for working dogs.

Now like I said, the reason that we recommend the standard VAT scheme for that type of client is because they're able to reclaim a lot of the VAT where clients are highly service Based where it involves a lot of manual labor, like grooming.

For argument's sake, they're not selling a product, they're delivering a service.

There's no VAT to reclaim.

So in that instance, what we would generally recommend is that we look at a flat rate VAT scheme for that type of client.

So anybody that is highly service based is most likely nine times out of ten better on a flat.

Yeah, flat rate scheme.

Now what that is, that's an agreement with HMRC, you still charge your clients 20% VAT.

So on the invoices that go out, if you show VAT on them, you're still charging 20%.

And that's another pitfall that people go down is they think because it's only 12%, well, you need to put 12% on the invoice, but it's not, it's 20.

So let's just build 20%.

Yeah, definitely.

And you've got to think of it, you've, you know, 12 isn't a VAT rate that you'll see on any product within the UK that's manufactured and sold in the uk.

You've your usual VAT rates that you'd see on receipt is 0%, 5% and 20%.

So this, this 12 thing, just think about, where have you seen it before?

If you haven't seen it before, it's because it's not quite right.

So what the flat rate is, it's an agreement with HMRC where they say for these type of sectors, we will agree a, a percentage of what we will collect from you as the business.

In what we think you'd have limited expenses.

So in, in terms of that, you don't reclaim anything on your expenses, but in return you only pay us 12% of your sales.

So in, in effect what you're doing is you're fixing the amount of that that you'll pay on every single sale that you have.

And because of that, what it allows you to do is to budget better because now you can work out what your tax bill is going to be every single month as your sales progress.

Now, in the first 12 months of being VAT registered, you do get a 1% discount.

So for groomers, your, your actual VAT rate to HMRC on a flat rate VAT scheme would be 11% in the first 12 months.

I have to double check that job.

Offers might come under a different category, doesn't it?

So jog walkers could be under services listed not.

But they could also fall into a limited cost business.

Now if they fall under a Limited cost business, the percentage that they can claim is a lot higher, which means that they eat more fat because they don't have the experience expenses that they would normally be able to offset against these things.

So you've got to be really careful with that.

So there's a little test that you have to do when you're doing the VAT to work out which category that you'll fall into to, to work out what that rate you'll be able to pay hmrc.

And if your expenses are low and they're not high enough to get you over that threshold, you may qualify for the limit cost business.

And then off the top of my head, like checking is about 16.

Yeah, I was gonna say, I think it's 16.

Yeah.

So you do get the 1% discount.

You do for the first year.

But if, if we look at the dog groomers to start with on a 12% flat rate VAT scheme, we've worked out that if you, if you charge your customers 15% as part of your price increase for going VAT registered, that will cover you for the VAT that you have to pay HMRC.

It will also give you around about a 1% pay increase as well onto your fees so that you have something in your back pocket.

And by passing over 15% rather than 20%, you're softening the burden, but still collecting enough money that you're not funding that VAT registration.

Your customers are paying a lot of.

People, do they go, I'm not putting my prices up again, so I'll just swallow the 20%, which, you know, oh, late and limited cost.

Get to work, stop listening to the podcast.

Yeah, well, I've lost my train of thought.

What?

Be corrected now by my apprentice.

You'll have bragging rights till Friday.

I know, I can't remember what I was saying now.

What was I saying?

It's important not to swallow the costs of the vat.

Oh, yeah, that was it.

Yeah, because we, we hear so many people, like even, like on the Facebook groups and even clients when they talk to us and they, and we tell them, you know, you're going to hit the VAT threshold.

Oh, well, I'm not going to put my prices up for my customers and leave.

I'll just swallow the 20%.

Like there's ways around it, like, please don't do that because all you're going to do is take the money out of your pocket and then there's just no point.

We see people then struggling for cash flows, saying that their business isn't worth it, and they can't do it because of that.

But it's because of those decisions that they made.

They were the wrong decisions to make, the wrong things to do.

So just please, you know, if you're going through that transition and you need help and you haven't got an accountant like, you know, please get one, whether it's us, someone else, you know, because they're going to help you and we will help you go through that transition.

We've done it with hundreds of clients that have had an absolute wobbler because they've hit the back threshold and think all the clients are going to leave them.

And then after about a couple of months you ring them back and they're absolutely fine.

You've just got to ride the wave a little bit.

You might get a couple of clients whinge or go elsewhere, but, but then they probably would have gone elsewhere anyway once you put your prices up and following yet.

So it, you know, if they're there just for price and you don't want them anyway, it's, it's pointless.

So please, please, please don't swallow the cost because that is something that we hear too many times and even when we try and persuade clients not to do it, they still do it sometimes.

But.

And that's it.

You know, when, when we talk about VAT as well and prices, it's important that you do have an annual price rise.

Yeah.

And what, what clients don't realize that, you know, and it's not necessarily obvious, is the majority of businesses out there raise their prices annually because of the, the cost of living inflation.

If you don't change your prices, it's almost as if you're having a price decrease because you're not keeping up with the cost of living.

So you're actually putting yourself in a negative position if you don't raise your prices every single year because things cost more money, the products that you buy will go up.

Your electricity, everything that you have from your suppliers will all have an increase.

And if you're unable to pass that increase over to your customers, then the only person that's paying that difference is you.

And as things become more expensive personally, you now no longer have the same amount of money.

Your money just doesn't go as far as.

So because of that, by having an annual price increase.

And you can build it into your terms, if you don't like having those conversations with clients, you can build it into the terms that they sign when they bring the dogs to you.

That says every year my prices are going to increase by, I don't know, 3% over the base rate of the bank of England, for argument's sake.

So that every year you can automate that price increase without having that difficult conversation with the client.

Yes, it's nice to take.

Tell them if you've got it built in, you're telling them up front that in 12 months time my prices are going to increase or they're going to increase from April.

Encourage them to read the terms and conditions.

Absolutely, absolutely.

Because again, that will come away and help you then with people not turning up.

And then they'll understand, you know, if there's a cancellation fee or, or when they can cancel without a fee and it kind of, you know, get, gets rid of that barrier of having that difficult conversation with somebody that says, look, you haven't turned up, you didn't give me the notice, you do have to pay my cancellation fee.

And that doesn't matter whether you're a walker, a boarder, a groomer.

That is the same for everybody.

We should all have terms and conditions that protects your revenue, your income, because it's highly difficult when somebody lets you down at short notice to be able to refill that slot.

And if you can't refill that slot, then the only person that's out of pocket is you as the business owner.

And if you've got bills to pay and staff to pay, this money has to come from somewhere because you're relying on that as part of your cash flow, as part of your profits, as part of your money at the end of the day to, to feed your family.

So you know, this, this, there's important reasons why behind cancellation fees, late, late fees, you know, are all part of business.

And it's, it's not because businesses are there to grab money off people, it's because that money was earmarked.

You've, you've, you've, you've closed that slot off, you haven't taken additional business on because of it.

And therefore it's money that you're relying on for whatever reason.

It could be to pay you vat, it could be, you know, to pay yourself.

It doesn't matter what it was for, but you need to make sure that you collect that somehow and protect yourself.

Slight tangent, but good tangent.

It's all part of pricing process.

I'm waiting for you to say how, how that relates people going to jail.

Oh, he's those that.

Usually what we touch on is everyone will do topics is we're going to jail somehow.

Yeah, but you know, which actually does lead us on to a very good topic of when people try to avoid that.

And again, you know, some people do it purposely, some people do about, you know, knowing and realizing or without realizing when they've got five Sole Trader businesses all earning 50 grand, like, oh, it's fine because they're under 90 grand.

No, because it's all combined.

Yeah.

So there's, there's little things like that where we've had people come to us with the two sole trader businesses and I've gone, what's the turnover?

And the combined turnover's over 90 grand and has been for, say, three years.

But they didn't realize that it was all in one pot.

So then we've got to go back and back data to again.

We see people on, on all of the, the different groups saying, oh, can I do this, can I do that?

And everyone's going, yeah, yeah, it's fine, I do that.

And we're like, no, you can't.

And again, something like that.

If you're unsure as far as the VAT's concerned, like, please, please, please go and speak to someone because otherwise you're going to get yourself in the hot water.

And when you have it, it's even worse.

It's.

This is slightly off topic, but on the same type of things with regards to vat.

So if you were doing something that you shouldn't be, maybe you're claiming an expense in your business that's not a legitimate business expense and really it's a personal expense.

So let's talk about pets.

So you've got your dog, you're a dog groomer and you bought the dog as, as a family pet.

That's its primary role.

You decided to take a couple of pictures on it.

You've, you know, you've practiced a little bit by giving it a little trim to, to try and improve your skills or if there's, you know, a certain cut or technique that you just need a little bit of practice with.

What we decided to do is a dog trainer using a dog as a stooge.

And then, you know, you get some bad advice from a, from a Facebook group where everybody says, oh, well, if you're doing that, you can claim the dog as a business asset.

And, you know, let's claim the food, let's claim the vet bills, let's claim.

When you go into the kennels and that whole has VAT on now, once you go VAT registered and you start claiming the VAT back on that, because you think that that's a Business expense.

What you've ultimately done is you've incorrectly recorded expenses on your sole trade aside, on your self assessment to lower your tax position, that wasn't allowable to start with because the dog's use in your business was incidental, which is slightly different to if it's a search and rescue dog or a guard dog or a sheep dog, where they are there to perform a very specific duty and the dog itself is bookable to do the service.

So they are the one that's generating the income, not necessarily you.

Those dogs are allowed, you know, and if you're using it as a guard dog to guard your premises, it doesn't sleep with you at home, it stays at the work premises because it's, it's, its primary function is to guard the perimeter away from your home.

So all those costs for those type of dogs would be allowable.

But a family pet that you're using on an ad hoc basis once or twice a month for a photo shoot, you know, just because it's in the salon or those sorts of things, they are incidental.

And the cost of that dog, it's upkeep, it's food, it's health care is not an allowable business expense.

So what you've actually done is you've lowered your tax position by misclaiming expenses that you weren't allowed to to start with.

So we've got a little bit there of an issue on the tax return if you then went and claimed the VAT back on those products as well on the food that you buy as member, it's a pet, they get charged 20% VAT on the food.

So if you're on the standard rate VAT thing, in theory you can claim that back.

But the problem is it's not a business expense to start with.

So now what you have is you've lowered your VAT position as well and you've actually reclaimed too much VAT from hmrc.

So not only are you got an issue on your tax return, you've got an issue on your VAT returns as well.

And we could potentially then look at whether or not that's VAT evasion and tax aversion because you're not paying the correct amount of taxes by misclaiming expenses that shouldn't have been in those things to start with.

So it's really, really important that when you go down this route that you don't listen to chat GPT because it gets it wrong.

We've had the cater that this morning.

Damn it.

Well, no, it's right In a sense of, I just didn't mention the benefit count.

So it was half right.

It wasn't necessarily wrong.

Yeah.

So you've, you've got to make sure that you take the, the information from legitimate reliable sources which hold up in a tribunal against hmrc, basically.

So if you think that your dog is a business asset and you can claim all these expenses against it, my question is what business function does it provide and how does it generate, how does it directly generate the income received to the business?

And if you say, well, it makes my skills better, it allows me to demonstrate the skills that I've got to teach other people's dogs.

We're still talking about you, we're not talking about the dog, it's about what he's doing for you.

And we get.

Thanks a lot.

We do, we do get it an awful lot.

And they're like, yeah, but I, I couldn't do my job without that dog.

And it's like, okay, so this dog is a dog that goes out and works on TV shows and you've trained it to go on TV shows because again, it's, they're booking the dog and the dog's generating the income for you, so therefore that's allowable.

Whereas if you're saying, well, no, what I've done is I've trained it and I'm teaching it, you know, how to do like train.

I use it to show other dog owners the task that I'm going to teach their dog.

But again, the use of it in the business is incidental and small because once it's shown that owner, the once what is that you're going to teach their dog?

The interaction is you and that person is booking you and it's your skills that is causing the business to have income.

So it's really important that we look at on a case by case basis what that dog does to make sure if those, those expenses are allowable and therefore if they are allowable, then what on the VAT proportion is allowable.

But just using a blanket yes and no approach just simply doesn't work.

And it involves pets.

You know what, we, we get that question in all of the groups, especially the GRIMA groups and with dog trainers about having their dog, you know, is a stooge in one way, shape or form.

And I think I saw one recently where there was about a thread of like 60 odd comments of people basically saying that they claim for their dog.

I think I might have tagged you in it.

You did.

I, I answered as well on that one.

Yeah, because people were saying, oh, yeah, no, I claim for my.

Yeah, I came for its food and all of this.

And I do this and everyone's like, yeah, yeah, yeah.

And this is the problem is that, you know, if you are the person asking that question and 90% of people or 99% of the people are saying yes, and then me or Lee go on and say no, even though we're an accountant, we know the answer, those people are most likely just to not forget about the fact that we've come in and go off.

The fact that 99% of the people have said, yeah, do it.

But unfortunately, with HMRC cracking down and everything, you could be that one person that they all dip and go, oh, hang on a minute, you put this through.

What else have you put through that's not allowable?

And then they go down a rabbit hole that you don't want them to go down.

So again, it's so important, and we say this pretty much every other podcast, to listen to a professional, you know, and get the correct advice.

I mean, we've had arguments on Facebook before where, especially when it comes to bloody massages and chiropractic, like, we don't even answer them anymore because we just get held abuse.

My accountant says this and my husband's an accountant and he puts it through.

It's just a minefield.

And which is why we always say, get an accountant.

Because then he can't go wrong then, because at least hopefully you're getting signed a correct advice on these things.

And that's the thing, isn't it, when people say, oh, well, my friend's an accountant or my husband's an accountant, my answer to that is, that's fantastic.

So when you had the last inspection by hmrc, what did they say about it?

And the general answer is, oh, I haven't, I haven't had an inspection.

Give us a link to where it was obviously behind on, behind the times.

If they've changed in mind and it never happens.

I do a dog walking group.

I'll say when everyone's like, no, no, you're wrong.

All right, well, please give me the, the legislation where legislation, it never comes.

It's like tumbleweed.

Be like, oh, well, yeah, because you can't find it.

Yeah, but yeah, that's the thing.

It's it when, whenever you make statements like that, you've got to be able to back them up with legislation.

So, and, and whilst HMRC isn't black or white, is very gray, there is enough information out there, albeit sometimes it's convoluted for you to make an informed decision of why you've claimed those expenses.

Yeah.

And there's no definitive list of what you can and can't claim, but there is the holy and exclusive rule that basically says the expense that you incur must be wholly and exclusively for business purposes.

Now, when you enter the pet into that realm, then it's no longer for wholly and exclusively for business purposes, because it.

You introduced a pet that was a family thing that was personal to begin with.

So that's when it starts to become very, very blurred and it is hard.

You know, you type something into Google or in HMRC's website and you get about 500 different answers.

And, you know, that's why we do these podcasts, is to make sure that, you know, if there's a specific topic that you guys are stuck on, then we'll talk about it because it's a lot easier than you typing into Google or ChatGPT.

Can I do this?

And then you get 500 different versions of yes or no and then you're back to Square one again.

ChatGPT doesn't just consider UK legislation either.

It considers worldwide legislation you can do in America, but it doesn't necessarily tell you that that is where it's got part of the answer from.

So it will mix what you can do in, in a foreign country and give it to you in the answer within the UK as well.

So we have always missing my story.

Oh, look.

Oh, no.

Oh, no.

He is the oracle of hmrc.

It's got like an HMRC encyclopedia in his head.

But yeah, so with the fact, then we'll just recap.

Please, please, please get advice from a professional that knows what they're doing.

Please don't try and avoid it.

Use it as a milestone to hit and achieve.

And if you've got to that point, like, you must have a good business plan to start with because not everyone can get to 90 grand.

Like, it's not a given thing.

So if you've got to that point, whether it was taking you one years or four years, you know, it's still a very good achievement and you need to just keep going because otherwise it's more ish.

And we've had clients where they've tried to stay under it and it's more, it's more faff to try and stay under it and more stress because you're.

Like, well, I've had evasion.

Well, yeah, form of activation.

You're avoiding the.

You're deliberately avoiding the vat.

Oh, I've had five new clients a day, but I've not been able to take them on because I don't want to go on the rat threshold.

I guess it's just daft.

You just need to smash through it, go through it and then by the time you've gone through it, you look back and go, I don't know what I was.

Clients think, well, you know what?

How are HMRC going to know that I didn't.

I haven't deliberately gone over the VAT threshold.

But think about it.

You file taxes every single year with the amount of your business turnover was on there.

People see, start up, up.

Yeah.

And all of a sudden this level is just below the £90,000 and that's how you stay for a couple of years.

So when you go, well, how will they know?

It's because they will just take a look at what happened in the past.

Yeah.

And.

And then they'll go, well, why, why haven't you got over it?

Why have you gone down?

You're all level, so you're obviously doing something to stay level.

So there are telltale signs that you are doing something that necessarily is, is, Is causing HMRC to lose out on money.

Because you should, in theory, you should have gone over.

Now there's, there's nothing to say, you know, you're getting on, you.

You want to slower pace with the business, you're going to slow things down a little bit, then that's absolutely fine.

You know, there's a legitimate reason of why we haven't gone over the VAT threshold.

But if that's the case, what we will start to see is the business starts to decline over the years because you are slowing that business down.

You're not just on 89,000 for the next several years where you're deliberately avoiding going over that threshold.

Then also ask questions, then, well, how are you keeping it below that threshold?

Are you declaring all your cash?

So again now, we're now starting to look at, well, how you managing it.

Your costs are going up, your.

But your sales aren't.

So are you taking income, undeclared income from other sources?

So again, there are telltale signs and alarm bells and red flags that do go off at HMRC end that says we need to take a closer look.

And they know more than you think.

Yeah.

As well.

They have access to a lot more than people think.

Yeah.

Sneaky beakies.

So, like I say that even when you come to do your tax return, like I think we discussed this in a, an episode like Ages ago that, you know, if you get your calculation, then you go back and tweak it and you get another calculation, you go back and tweak it again because you forgot something, it will raise a red flag.

So I'm sure they'll have some sort of, like, technology that, like, flag certain tax returns.

So you've got to be really, really careful.

I just.

You just got to go for it, man, just do it.

Just do.

We have loads of clients that will literally cry to us on the phone, go, no, I don't want to.

And then like six months later we chat to them again and they're absolutely fine.

And now they're one, like 110,000.

So it's just that one thing you just got to get through.

And I think if you've got the right support network, whether that be friends, family, colleagues, accountants, whatever, then you can do it.

I had a meltdown when I hit the vat, because, remember I was on the phone to you and he was like, have you checked?

I said, oh, no, I'm fine, I'll be all right.

Checked.

87.

Crap.

I had an absolute meltdown.

I was like, oh, no.

But even then, though, and obviously our prices are a lot higher than like a dog groom or a dog walker, so it's a big chunk to add on.

And I think we only lost like two clients because it was just before me and Lee merged, we only lost about two clients, I think, when it went back registers.

So.

But yeah, I mean, I did have a meltdown, but, you know, I know.

You will get accounts and say, well, if you're approaching that threshold, you can swap to, like a limited company, change the entity of the business to restart the clock.

Now, it does delay the inevitable, but also what happens is if there's no other changes and it's a continuation of trade and you're not introducing another partner to the business, you're not taking the business in a different direction, maybe by offering different services, then that's a continuation of trade.

And just because you've swapped one, a sole trader to a limited company, that doesn't negate the VAT registration site.

You'll still have to register for VAT even in the limited company, even though it's not at 90, if there was a change and you are offering a different service, then that 90 would start again by registering as a limited company.

But there has to be a commercial reason for that change of entities, not just to avoid the vat, just doing it to avoid the VAT is illegal.

Whereas if there's a commercial driven reason for that change and you're offering something different with new partners or anything along those lines, then it's perfectly fine to restart the clock and to go from zero to 90 again in a limited company.

But if you've already gone over the 90 and then you try to do it, nope, too late.

Sorry, Dan.

That's why we have that conversation because obviously we were merging.

I was, oh great, we've got life, it's recent set.

And that's why you were like, oh, just check.

I was like, yeah, oh no, I've hit it.

We're gonna have to go about registered off the bias.

But, but even at that time, when me and Vic then did merge companies, we went that registered from day one.

I mean, don't get me wrong, I would have preferred to have, at the time it was 85, I would have preferred to have had the £85,000.

I haven't paid that.

But just because of the hassle and obviously from the compliance perspective, because of our licenses that we had, it was better for us just to stay that registered from day one and to take it.

But, but in theory and from HMRC's perspective, we could have just stayed under the £90,000 not that registered until we hit it with the, with our newly merged company where the two of us joined together.

So, you know, there are people out there that will pay more taxes and we did ourselves because we thought it'd be easier for our clients as well, because rather than going VAT registered a couple of months later, right now we're not VAT registered or by the way, we're VAT registered again a few months later.

It just wasn't worth it.

So.

But for the ease of us, for our pricing, for all our internal systems, we just did it from day one.

So, you know, and, and our VAT bills are now eye watering every quarter.

I, yeah, it's not nice.

I don't get involved, I don't look and then I'll just see it go out of the bank and I go, oh, that's obviously the VAT bill.

Um, but, yeah, but the thing is, and we mentioned these a lot as well, we have the pots on our bank.

We start.

Other banks still are out there and we put every, every penny that comes into the bank, even if it's 10 pound Lee or split it between the million pots that we have for the various different things.

So we'll always keep a buffer in the bank and then any money that goes above that always gets distributed to the pot.

So that we can keep on top of it.

And we say that to clients.

Have a tax pot, have a VAT pot, you know, have a paye pot, have a wages pot, you know, because then it keeps you on top of things and you know, if you are someone that struggles with, you know, how much to save for VAT and tax and things like that, especially the tax side, we do have a tax calculator so you can purchase it off the website, put all your information in there and it will tell you how much tax to put away in your savings pot so you don't have to guess.

I know some people will cut a certain percentage through and sometimes that works, but obviously there's a lot of variables that go on throughout the year and in your life.

So if you do wonder how much tax to put away, then please check out our tax and pricing calculator that's on our store on the website.

I feel like Lee's looking for the website.

I mean.

I was waiting for the banner to come up but it did.

Oh no, I've got a better one.

Yeah, there it is there.

Petcounting.co.uk store and again, if you need help with your pricing as well as a dog groom or a dog walker.

And trainer.

And trainer.

It is useful for you guys as well because you can put in there how much you'd like to earn and then it'll tell you how much to charge, power and per dog etc.

So please, please, please take a look at that.

Don't sit and struggle month with what to put away and then you won't have a nasty surprise when you get your tax bill and what you have to pay in January.

But obviously do remember the payments on account.

I don't think it puts that on.

Doesn'T do the payments on account on because it, there's, there wasn't somewhere that I could put what they've paid last year into it.

So it, it reminds you about them that you will have to make them if it's over a thousand pound, but it doesn't tell you what they are.

They usually go on your list.

Yeah, so you can just half it and then add it on and you'll have a good idea of what it is.

But please, if you are a bookkeeping client of ours, we also include the tax breakdown as well in our performance packs you go every quarter.

So if you're a sole trader on one of our packages, you'll get an update from the bookkeeper every quarter with how much tax that you'd have to Pay typically up to that point in time and you have four of those a year.

So by the time that one of the accountants does your tax at the end of the year, there'll be a couple of adjustments in there for things that have been missed, but generally that's how much your tax bill is going to be.

To give you an idea of what you should be saving as the year goes on.

So there are benefits of being a client of ours on our bookkeeping packages.

A lot of clients do use those performance packs.

Yes, it's a good guide.

Just give what you do.

Oh, someone didn't put his phone on.

Silence tells everyone else to do it and then.

I know, yeah, but yes, we will leave it there for today, hopefully.

That's been informative.

We could probably talk about that for like hours and hours and hours.

Yeah, but like I said, the main piece of advice is please just get professional advice and try not to listen to stuff online because 99% of the time it's wrong.

So yes, please, please, please and get yourself on software.

We keep moaning on about it for making Tax Digital.

It's coming into play next April.

So again, if you are in that 50 grand turnover arena, then please, please, please look at, look at software because it will be compulsory and you randomly put Recommend a friend on the bottom.

Well, we don't tell people that we're giving away free money and I just don't want.

It's a good time just to, you know, we're August now, we're coming up to Christmas, so what a great way to get yourself a couple of Amazon vouchers.

I recommend a friend, they'll join the petty pantas and you'll get 50 quid in as Amazon veg to spend wherever you want.

So there you go.

If you recommend us, they must come through this link, guys, because then we get it specifically to a mailbox.

So if you do recommend anyone to us and please give them that link, don't just email us or tell them, tell us your name because 9 times out of 10 they forget and they don't say they've been recommended by someone.

So please use the link and hopefully we will see a lot of you at the Expo November.

Just a heads up that the doors close for the in person tickets at the end of this month and there will be no more, there's only a few left.

So if you do want to grab one before they close, then please do.

Like I said, the doors will close on the 31st of October and then the online tickets will go Live and there'll be no more left for the in person.

So make sure you grab them and hopefully we'll see you there in person or virtually on November 15th in Birmingham.

Other than that, I will be here next week with a lovely special guest.

I will tell you the name when I know who it is.

My diary.

And I don't want to say them on one because we've got two coming up this month so we like to mix it up.

We do another advert from New Thomas.

Go ahead.

It's just about the bookkeeping offers that we've currently got on.

I know that Tegan's posting the groups at the moment, so if you are thinking about becoming a client of ours, we probably will be closing the books towards the back end of this year.

I know that sounds odd because we're only in August, but it's, it is creeping up on us really, really quickly.

But if you are thinking about joining us on the package and want all of your bookkeeping taken care of, your self assessment tax return, you want help and advice for your business, now is the time to join us.

You're getting 30% off our bookkeeping packages for the next three months and we give you award winning software.

You get the Hub Dot unlimited bookkeeping, the, the performance packs with the tax in there as well.

You can just send Tegan a quick email@teganculpio.co.uk and she'll be able to give you a ring back to discuss, you know, the ins and outs, how much it is for you, the offers that we've got on and if you want to go ahead, she'll, she'll get the ball rolling for yourself.

So join us.

Now we are limited because it all depends on the number of members of staff that we have and their capacities.

So if you are, get in touch, we'll see where we're at and if we can help, we'll help.

And if we can't, we'll be honest and upfront with you and say, look, we can't do it but just reach out, see where we're at and see if we can help.

Fabulous.

I'm on brand today.

You are, you're not, right, I'm not.

So everyone have a good week and thank you for listening.

Like I say, if you listen to on the podcast, make sure you press subscribe and we will be back next week with a lovely special guest who will let you know who that is near the time.

And yeah, have a good one, have a great one.

Take care.

Bye bye, bye.

Thanks for listening.

If you've enjoyed my podcast, don't forget to subscribe for me and if you want to speak to me, please visit my website@www.petaccountant.co.uk.

and if you'd like to join my Facebook group which is full of like minded pet professionals, then search Accounting for Pet Professionals in Facebook and I will see you there.

Sam.