Make More Profit By Registering For VAT

For those of you who don’t like reading I’ll say right at the start that I think YOU SHOULD GET REGISTERED FOR VAT AS SOON AS POSSIBLE unless a large proportion of your work is for private individuals or non-registered businesses.

I’ve made a calculator to show how much extra profit you’d make by being VAT registered and to work out whether the Flat Rate Scheme is better for you.

While processing our suppliers’ invoices it never fails to amaze me how many courier owner drivers and even small courier companies aren’t registered for VAT. With the VAT rate due to increase to 20% in January it seems to me that it’s now essential that everyone in this business gets VAT registered as soon as possible.

How far would you drive to save 20p/litre on fuel costs? How much haggling would you be prepared to do to knock £2,000+ off the cost of a new van? How about all your customers agreeing to increase your rates by 20%? This is what you’re missing out on by not being VAT registered.

Many people seem to be scared of registering for VAT – Read More…

Posted under Finance and Accounting

Posted by Alec at 10:06 am, August 23, 2010

Excel VAT Invoice Template for UK Same Day Couriers

Following on from my recent post What Details Need to Appear on a VAT Invoice for Courier Services in the UK? I thought it might be useful to supply an editable invoice template to illustrate exactly what’s needed and to maybe provide a starting point for to enable same day couriers to design their own invoices which meet all the legal and business requirements.

Download the template here (MS Excel template file) or view it as a Read More…

Posted under Finance and Accounting

Posted by Alec at 5:24 pm, August 14, 2008

What Details Need to Appear on a VAT Invoice for Courier Services in the UK?

There are strict, but thankfully very simple, rules for what needs to appear on a VAT invoice in the UK.

To satisfy HMRC you need to include on your invoice:

The date of issue of the invoice.
A sequential number that uniquely identifies the invoice.

Your business’s name, address and VAT registration number.
The name and address of your customer.
Your customer’s VAT registration number (only if they’re VAT registered in another EU country and you’re invoicing without VAT).
The date of supply of services (the date you did the work).
A description of the services supplied (from a VAT point of view ‘Courier work’ would be OK – your customer may want more detail).
The VAT rate applied (normally 17.5%).
Total amount of VAT payable.
The total amount payable for the whole invoice excluding VAT.
The total amount of VAT charged at each VAT rate (normally just one entry for the 17.5% rate).
The unit price of the services supplied and the number of units charged for – if this is normal practice for your industry (as far as I’m aware it isn’t normal practice in the courier industry) or required by your customer. In practice you can ignore this unless you charge your customer by an agreed price per mile or hour worked AND they’ve asked you to include the figure on your invoice. For example ‘200 miles @ 70p/plm’.

To satisfy Companies House and Trading Standards:

If your business trades under a name other that its actual Read More…

Posted under Finance and Accounting

Posted by Alec at 5:21 pm, August 6, 2008

Can I claim back the VAT on the things I bought before I was registered for Vat

When you first register for VAT you’re allowed to claim back the VAT on some of the things you paid VAT on before you became VAT registered. The claim should always be made on your first VAT return. HMRC are ‘allowed’ to let you claim at a later stage but they don’t have to do so.

You must be able to provide receipts showing the VAT for anything that you claim the VAT back on in this way. Be warned that HMRC are very likely to ask to see all the supporting VAT receipts if you put in a big reclaim of VAT on your first VAT return. This is nothing to get worried about as long as you’ve stuck to the rules.

You can claim the VAT back on any ‘goods’ that you’ve Read More…

Posted under Finance and Accounting

Posted by Alec at 7:40 pm, July 8, 2008

I’ve registered my courier business for VAT – what now?

Once you’ve applied to be registered for VAT it can take anything from 2 weeks to 3 months (even longer in certain cases) for you to receive confirmation of your registration and your VAT registration number.

Unless you’ve taken the (sometimes sensible) option of starting your registration on a date in the future you could have a period of 3 months or longer when you’re liable to account for VAT on all your sales but you’re not legally able to charge VAT. This obviously leaves you with a problem.

You’re not legally able to show the VAT as a separate amount on your invoice unless you’ve received confirmation of your VAT registration. HMRC’s solution is Read More…

Posted under Finance and Accounting

Posted by Alec at 6:16 pm, June 29, 2008

I need to take action to recover a bad debt, what should I do?

Whilst it’s tempting just to go to and issue a claim through Small Claims it’s important that you only do this as a last resort. You need to be able to show the court that you have already taken reasonable steps to get your money – including making a formal request for payment making it clear that you will commence legal action if you don’t receive payment within a reasonable period – usually 7 days.

The claim procedure is straightforward enough but if you’re not used to it then it can be a bit daunting, Read More…

Posted under Finance and Accounting

Posted by Alec at 2:05 pm, April 5, 2008

What are Late Payment charges?

The Late Payment of Commercial Debts (Interest) Act 1998 gives you the right to claim interest and compensation for late payments.

This is a statutory right – your customer doesn’t have to agree to it, you don’t have to inform them in advance that you intend to charge them if they pay late and you are not permitted to agree in advance to waive late payment fees unless a suitable alternative form of late payment penalty is agreed.

For invoices up to £999.99 you can charge £40 PER LATE INVOICE. For invoices of between £1,000.00 and £9,999.99 you can charge £70 PER INVOICE. You can also charge interest on a daily basis, currently at a rate of 13.5% per annum. Read More…

Posted under Finance and Accounting

Posted by Alec at 9:50 am, April 5, 2008

Should I be VAT Registered?

Should you be registered for VAT? Almost certainly – unless you do a lot of work (say over half your turnover) for private individuals or companies that aren’t VAT registered. Otherwise you’d be crazy not to register for VAT – you’re just handing the government your money.

Having decided that you need to be registered for VAT you need to decide which scheme and which accounting method you’ll use.There are two relevant VAT schemes that apply to you as a courier – either ‘normal’ VAT or the Flat Rate Scheme (FRS). Both schemes give you the option of cash basis or accrual basis accounting. Accrual basis means that you account for VAT based on the invoices you’ve raised during the VAT quarter whereas cash basis means you only account for the VAT on payments you’ve actually received from your customers. Read More…

Posted under Finance and Accounting

Posted by Alec at 4:08 pm, March 31, 2008

Would I be better off using the Mileage Allowance Scheme?

Self-employed people with a turnover under the VAT registration threshold (whether they’re registered or not) are allowed to claim HMRC Approved Mileage Rates instead of actual running costs. 40p/mile for the first 10,000 miles then 25p/mile.

Since the government haven’t raised the rates since the scheme was introduced in 2002 it’s not quite as beneficial as it once was but it can still be a very tax-efficient, and simple, way of claiming your vehicle expenses under certain circumstances.

It works best for owner-drivers with rented small vans doing very high mileages. 2500 miles per week equals about £650 allowance for £85 rental, £20 insurance & £250 fuel. Read More…

Posted under Finance and Accounting

Posted by Alec at 4:00 pm, March 31, 2008