Roland Beevor on tue 4 may 10
-------- Original Message --------
Subject: Re: [Clayart] VAT vs. Potters UK and EU members comment
Date: Tue, 04 May 2010 11:29:05 +0100
From: Roland Beevor
To: douglas fur <23drb50@GMAIL.COM>
I don't know anything about how the States might implement VAT but a=3D20
couple of aspects of the UK experience may be illuminating.
As you (and the name) suggest the tax is intended to be on Value Added,=3D2=
and was particularly attractive to governments in the days of high price=3D=
inflation because it acted as a tax on windfall profits when goods which=3D=
had been in store were sold at the current price rather than what would=3D2=
have been appropriate in terms of what the wholesaler paid. Being a=3D20
regressive tax it is less significant to high earners who may be more=3D20
important customers to a potter? In UK essentials such as food are=3D20
exempt, but nothing is simple, sweets and buscuits (candies and=3D20
cookies?) are VATable, and some things are not easily defined, such as=3D20
cookie shaped cakes.
The first difficulty for a small business is to decide whether to=3D20
register for VAT (there is a turnover level above which VAT is=3D20
compulsory, =3DA370,000, which if your material costs were =3DA37,000 would=
leave scope for a good income for a sole trader). Of course if you are=3D2=
not registered you can't reclaim the VAT if you buy a van or build a=3D20
studio at your house. This makes for a very difficult decision for=3D20
someone starting out, and although you can include expenditure made=3D20
before registration (and indeed claim a tax credit if expenditure=3D20
exceeds income) it is even more important to keep complete records (and=3D2=
a clear head).
Many small businesses find calculating the VAT due so much trouble that=3D2=
they pay at a standardised rate for that type of business on their=3D20
turnover. Any extra they pay is less than an accountant would have=3D20
cost. Potters will not be a big enough category to have a rate set.
If you trade with other EU countries VAT is much more exciting, you have=3D=
to get your customer's VAT number and make a make a return of all=3D20
transactions with other countries, not advisable without a computerised=3D2=
accounting system (and then not straightforward).
There is another nice problem when the VAT rate changes and you have=3D20
billed someone before they get their goods, do you start over again, or=3D2=
offer a discount so that the price they paid is correct (again computer=3D2=
literacy is advisable).
You'll find tradesmen even keener to be paid in cash.
On 01/05/2010 00:21, douglas fur wrote:
> Help, They're talking about a VAT in the US now
> What's your experience of VAT's and the impact on potters?
> To my understanding if I pay U$2.00 for materials and make a mug which =
> sell for U$20.00 I've got a huge "value added" exposure-
> (U$20.00-2.00=3D3DU$18.00 which looks to me like I've added 18.00 of valu=
> Does this work out or is it just worried imaging?
> Internal Virus Database is out of date.
> Checked by AVG.
> Version: 8.0.100 / Virus Database: 270.13.25/2256 - Release Date: 7/23/=
2009 6:02 AM
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