On Dragon's Den yesterday, Deborah Meaden asked a participant whether their turnover included or excluded VAT.
(ie was his projection 600 or 720k).
Now, as we know, turnover should not include VAT, so it was an interesting point, but confused the person and he didn't get any bids.
Was it a fair question?
Replies (8)
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I think it was a very fair question. Turnover per accounts may very well exclude VAT but in more general terms one needs to know whether sales income is inclusive or exclusive. His projections may have been based on the selling price.
Especially a consumer-facing business. In my experience, retail managers focus on cash in the till and leave us accountants to worry about the VAT.
The actual pitches are much longer than the 5 mins or so we see on TV. My guess is this was shown because it best showed the entrepreneur not to be in command of his numbers.
Agreed, but don't forget he only pays VAT on the margin, so it may only be half the £120k.
Anyone going on Dragons Den without having consulted an accountant beforehand on their business plan projections is just begging for rejection.