We bought an established hair salon last year as a 'transfer of a going concern'. It was already VAT registered so the new Ltd Co has been VAT registered since purchase (Flat Rate scheme 12%, including 1% year one trading discount; we don't spent much on stock so reclaimable amounts would be modest). We have 7 staff, all part time, all TUPI'd over. We expect 12mth turnover c.£95,000. However due to three new competitors locally there's pressure on sales and with rising costs/rates/wages the VAT bill keeps wiping us out. Growth significantly above £100k will be tough. We've removed 2 staff members and another will soon go. We're going to close 1 or 2 days a week so everyone is working the same pattern.
If we de-register for VAT on the basis we currently believe we'll now be within the threshold next 12mths, how do we best monitor our level of sales? Just use a cumulative 12mth figure starting from today?
For the sake of the staff I'd really like to avoid arbitrarily closing for 3-4wks in November just to stop sales (we declare 100%, I know many don't :-| Staff keep their tips)
If we accidentally go over by a few pounds would that mean we'd automatically owe 13% on the full 12mth sales?
Our decision/timing is complicated by a key member of staff being on maternity leave. It's a cost we'll ultimately get back but we can't quantify what extra income she'll generate if/when she returns, so we may need to restructure again in a couple of months if many clients do return for her.
We originally registered in February. Our financial year end is February.
All advice and any tips very gratefully received!!!
P.S. We're meeting our accountant on Monday, but the more you know...!!