[Lambic]

Hello Folks,

I have a registered smallholding.

I would like to start a very small business selling bits n bobs from around the place, with a view in the future to selling fruit from orchards and a polytunnel perhaps. A retired business generating a small turnover from products supplied by the smallholding.

Having spend large amounts of cash on equipment over the last 30 months, a work colleague suggested investigated looking at voluntary VAT registration

My focus has been on improving the environment for wildlife and amenity value, but I need to be a bit more switched on financially.

Are there any forum members who have gone down this route and can advise ?

Many thanks

[Womble]

Yes.

Any accountant worth their salt will be able to help you with this. It's not too difficult, and gives us a refund of a hundred or so pounds a month.

The key thing to understand is whether any of the things you're going to be selling will be VAT-rated, because that will in effect increase the prices customers have to pay by 20%. However, if you're selling food, that won't apply (because 0% rated).

There are some funny wee anomalies though. For example, honey bees are 0% rated for VAT, whereas if you're selling bumblebees,  you'd have to charge 20% VAT on them. [IDK who sells bumblebees, but seemingly somebody must, or it wouldn't be a rule.]

[ZacB]

Another little anomaly - vat is applicable with honey bees if you were selling a hive of bees I believe. All to do with the packaging your selling them in, a corex poly nuc with bees no issues.


As for the voluntary registration, no issues with that at all. Helps if you can do your own basic bookkeeping as quarterly returns (other terms are available I think) are required. A added hassle is now having to submit your return through a third party but we use Vatify which is still free to use.
If you’ve spent out on machinery then well worth it, 20% refund on Vat can amount to a fair chunk.


As Womble said though - as long as your end product is vat free.

[SallyintNorth]

Basic foods are VAT free, but if you "add value" in any way, the resultant product may or may not be VAT free, so do check that for all the products you might want to sell.  You'd have to charge more (or receive less net) for any which are VATable. 

Also, make sure you've thought about future "gotchas", for instance if you subsequently decided to offer bed and breakfast, or camping barn accommodation or similar, those would now be VATable supplies as you are VAT registered.  I don't know if you are able to de-register if at a point in the future it became better for you to be unregistered, so definitely check that side of things out too.

(Another example of a possible gotcha : At present jams and chutneys are VAT free, but if you later decided to run a small cafe, then all your food supplies could potentially become VATable.)

[Lambic]

Many thanks for all your replies.

My initial thoughts are to selling things lol Ike the following:

* pond plants via eBay
* Arts and crafts supplies foraged from arpund the place.

* In 5-10 years, perhaps local sales of fruit.

All very modest. And certainly would never dream of the B&B route.

Would my very small initial turnover, perhaps only a few hundred pounds a year, cause a problem ?

[Womble]

OK, so pond plants and arts & crafts supplies are going to be VAT-able, thus either increasing your final selling price to customers, or reducing your margin by 20%.

You have to show that the supplies you're reclaiming VAT on are required for the purposes of your trade, so if those aren't in proportion, that might not be allowed. I'm not an accountant though, so best take advice from somebody who is!

[Rosemary]

I'm not familiar with the rules any more but I'd check with an accountant on how far back you can claim from registration date.