New to Contracting - VAT Question New to Contracting - VAT Question
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  1. #1

    Nervous Newbie


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    Default New to Contracting - VAT Question

    Just stating Networking contracting, CCNA R&S and CCNA Security Cert....working to CCNP + CCNP Sec

    I've not contracted before and mostly my experience comes from full time employment, my main questions are on VAT.

    Looking to form a LTD company, I'll be contracting through this but the company will have 2 other IT business interests and will be dealing directly with Residential/Corporate customers.
    Will be going VAT registered immediately as I have a lot of setup equipment to buy and will need the VAT back, I was wondering about the day rates I see networking contracts advertised at.

    Say the day rate is £300, if I'm VAT registered will the agency pay VAT on top of my day rate ? Obviously, if I'm VAT registered I'll need to be charging VAT on my contracting work.

    Advice greatly appreciated.

  2. #2

    More time posting than coding


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    Quote Originally Posted by newITcontr View Post
    Just stating Networking contracting, CCNA R&S and CCNA Security Cert....working to CCNP + CCNP Sec

    I've not contracted before and mostly my experience comes from full time employment, my main questions are on VAT.

    Looking to form a LTD company, I'll be contracting through this but the company will have 2 other IT business interests and will be dealing directly with Residential/Corporate customers.
    Will be going VAT registered immediately as I have a lot of setup equipment to buy and will need the VAT back, I was wondering about the day rates I see networking contracts advertised at.

    Say the day rate is £300, if I'm VAT registered will the agency pay VAT on top of my day rate ? Obviously, if I'm VAT registered I'll need to be charging VAT on my contracting work.

    Advice greatly appreciated.
    Yes. And indeed on top of any expenses you incur specifically for the client, that the client will specifically reimburse you on.

    Day Rate
    Expenses
    Total
    + VAT
    Total Invoiced

  3. #3

    Contractor Among Contractors


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    99% will, but I would still quote "rate+VAT" in any correspondence

  4. #4

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    If you are that new you really need an accountant and you need to speak to them. They should guide you through the start up questions. Don't worry about pestering them constantly. You are paying for it.

    Don't forget to read the newbie guides to the right and trawl google. Any question you can think of in your situation will have been asked endless times. You'll learn a lot more reading up to find your answer than you will just asking us.

    Got a bit of reading to do I think.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  5. #5

    Nervous Newbie


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    Quote Originally Posted by northernladuk View Post
    If you are that new you really need an accountant and you need to speak to them. They should guide you through the start up questions. Don't worry about pestering them constantly. You are paying for it.

    Don't forget to read the newbie guides to the right and trawl google. Any question you can think of in your situation will have been asked endless times. You'll learn a lot more reading up to find your answer than you will just asking us.

    Got a bit of reading to do I think.


    Appreciated NLUK, I don't want to fill the forum with redundant questions...

    I'll get to reading the newbie stuff here, thanks to those who've answered though!

    Look forward to being a part of this forum and hope to be able to contribute ...something...sometime


  6. #6

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    Quote Originally Posted by simes View Post
    Yes. And indeed on top of any expenses you incur specifically for the client, that the client will specifically reimburse you on.

    Day Rate
    Expenses
    Total
    + VAT
    Total Invoiced
    That depends on if it’s a disbursement or a recharge. If OP is purchasing equipment on behalf of their client (that the client then owns) it should be treated as a disbursement. In which case it’s:

    Day Rate
    Total
    + VAT
    + Disbursements

    Recharges would be costs you incur yourself in performing the contract that the client has agreed to reimburse separately like travel, accommodation and subsistence. These can be recharged at whatever cost you agree with the client.

  7. #7

    TPAFKAk2p2

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    Quote Originally Posted by newITcontr View Post
    Just stating Networking contracting, CCNA R&S and CCNA Security Cert....working to CCNP + CCNP Sec

    I've not contracted before and mostly my experience comes from full time employment, my main questions are on VAT.

    Looking to form a LTD company, I'll be contracting through this but the company will have 2 other IT business interests and will be dealing directly with Residential/Corporate customers.
    Will be going VAT registered immediately as I have a lot of setup equipment to buy and will need the VAT back, I was wondering about the day rates I see networking contracts advertised at.

    Say the day rate is £300, if I'm VAT registered will the agency pay VAT on top of my day rate ? Obviously, if I'm VAT registered I'll need to be charging VAT on my contracting work.

    Advice greatly appreciated.
    By residential customers do you mean private individuals (not VAT registered)? If so, then by registering for VAT (if you don't need to) you will be 20% dearer than your non VAT registered competitors for the same money in your account.

  8. #8

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    Quote Originally Posted by TheCyclingProgrammer View Post
    That depends on if it’s a disbursement or a recharge. If OP is purchasing equipment on behalf of their client (that the client then owns) it should be treated as a disbursement. In which case it’s:

    Day Rate
    Total
    + VAT
    + Disbursements

    Recharges would be costs you incur yourself in performing the contract that the client has agreed to reimburse separately like travel, accommodation and subsistence. These can be recharged at whatever cost you agree with the client.
    Indeed. I just didn't think the OP was anywhere near all that...

  9. #9

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    Quote Originally Posted by simes View Post
    Indeed. I just didn't think the OP was anywhere near all that...
    I think for most of us on here disbursements aren't something that would come up much, but from how OP describes what they do it sounded like something that might come up for them - I could be wrong!

  10. #10

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    Quote Originally Posted by TheCyclingProgrammer View Post
    I think for most of us on here disbursements aren't something that would come up much, but from how OP describes what they do it sounded like something that might come up for them - I could be wrong!
    Ah yes. I must admit, I took that to be his LtdCo set up purchases. Not for the client. But, fair play.

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