HI,
'Christine runs a small hairdressing salon with a declared turnover including VAT of £1,200 per week. Vatable supplies are about 10% of sales inclusive of VAT. '
Dont really understand the last sentence. Does this mean she is only taxable on 10% of her £1200 revenue and the other 90% is exempt? so £120 p/w is subject to 20% VAT ie £24 a week?
Replies (13)
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How I see it
Vatable supplies are about 10% of sales inclusive of VAT. So she pays £200 VAT per week less £20 deductible from supplies ie her VAT bill works out as £180 per week.
Scalloway's analysis
Is probably the correct one. But, out of context at least, the statement is very badly written. It could mean something completely different. Perhaps 90% of her turnover is rental income. Who knows?
almost
I read it as 10% of £1200 gross being taxable supplies = £120.
Figures are supplies gross so 1/6th is VAT = £20.
Can't imagine why all supplies aren't taxable for a hairdresser though.
Could be
I read it as 10% of £1200 gross being taxable supplies = £120. Figures are supplies gross so 1/6th is VAT = £20. Can't imagine why all supplies aren't taxable for a hairdresser though.
or, it could be:
Turnover, inclusive of VAT, is £1,200 = x
VATable supplies = 10% of x = £120
S/R VAT on £120 = £24.
I still favour Scalloway's view, but the whole thing is so badly worded the answer could be any number you want.
all failed
I think we've all failed. We haven't read the full question.... It wasn't posted in full!
Chair Rental is no longer exempt, and must be taxable. The law changed with effect from 1 October 2012.
I agree with cparker87; why is any of a hairdresser's turnover exempt?
More questions than answers!
Who said anything about chair rental?
Perhaps she lets the back rooms to a beautician and masseuse? of course, one wouldn't normally class such income as 'sales' or 'turnover' but given the wooliness of the statement who knows? To reiterate, I still favour the initial analysis.
Chair Rental?
Perhaps she lets the back rooms to a beautician and masseuse? of course, one wouldn't normally class such income as 'sales' or 'turnover' but given the wooliness of the statement who knows? To reiterate, I still favour the initial analysis.
No one. It's just me trying to fill a gap in the OP.
Well
Perhaps she lets the back rooms to a beautician and masseuse? of course, one wouldn't normally class such income as 'sales' or 'turnover' but given the wooliness of the statement who knows? To reiterate, I still favour the initial analysis.
No one. It's just me trying to fill a gap in the OP.
You'll need a trade size bucket of Polyfilla
shameless plug
Perhaps she lets the back rooms to a beautician and masseuse? of course, one wouldn't normally class such income as 'sales' or 'turnover' but given the wooliness of the statement who knows? To reiterate, I still favour the initial analysis.
No one. It's just me trying to fill a gap in the OP.
You'll need a trade size bucket of Polyfilla
You must be affiliated to Polyfilla. Other cavity fillers are available.
Residential
Maybe 90% of her income comes from the flat upstairs.
Exam Question Setting - FAIL.
If she is trading below the VAT registration threshold then she should deregister. Do I get extra marks?
Matrix You got there before me. The cost of a hair cut is the same whether you're Vated or not so why register if you don't have to. I have a hairdressing client who has just gone over the limit and couldn't understand why her accounts turnover went down after she VAT registerd An interesting conversation ensued