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Limted Cost trader and FRS

Am I wrong?

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I have a one director engineering ltd company working on repairing trains etc.  Apparerently outside IR35.

They provide no tools, materials or anything other than their skills.

I've said it's pointless registering for VAT as they are a Ltd cost trader.

All the other chaps there doing exactly the same job are registerd for VAT and said do it for a 10% pay rise!!

I've asked how they get around the minmium limits.  They buy and sell goods to each other apparently and also order goods through amazon but cancel it an never pay.  They think that the invoice will be proof for HMRC- obvioulsy this is VAT fraud.  I think tools wouldn;t count anyway.

The fraud aside, what an earth could the company actually buy to get around this?  I think this is a perfect case of  LTD  cost trader surely?

 

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By rmillaree
29th Sep 2021 12:24

Its simply another version of pub gossip - some may be boxing clever (can you buy autocad on a cd???) - as to how legitimate the claims are you would need to go through with a fine tooth comb - notice 733 has more than enough useful pointers in that regard - you seem to be spot on with your summary that these bods sound more like fraudsters than people in business - its a bit ridiculous anyone making up fake stuff when its the vat office that is monitoring the situation - perhaps some bods dont see all "stealing" as being the same. Who knows perhaps our random tribunals process would even side with the trader here if they bought something they didnt like it and sent it back (or changed their mind before being delivered).

"and also order goods through amazon but cancel it an never pay. "

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By rmillaree
29th Sep 2021 12:24

Its simply another version of pub gossip - some may be boxing clever (can you buy autocad on a cd???) - as to how legitimate the claims are you would need to go through with a fine tooth comb - notice 733 has more than enough useful pointers in that regard - you seem to be spot on with your summary that these bods sound more like fraudsters than people in business - its a bit ridiculous anyone making up fake stuff when its the vat office that is monitoring the situation - perhaps some bods dont see all "stealing" as being the same. Who knows perhaps our random tribunals process would even side with the trader here if they bought something they didnt like it and sent it back (or changed their mind before being delivered).

"and also order goods through amazon but cancel it an never pay. "

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Replying to rmillaree:
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By djn
29th Sep 2021 12:46

rmillaree wrote:

Its simply another version of pub gossip - some may be boxing clever (can you buy autocad on a cd???) - as to how legitimate the claims are you would need to go through with a fine tooth comb - notice 733 has more than enough useful pointers in that regard - you seem to be spot on with your summary that these bods sound more like fraudsters than people in business - its a bit ridiculous anyone making up fake stuff when its the vat office that is monitoring the situation - perhaps some bods dont see all "stealing" as being the same. Who knows perhaps our random tribunals process would even side with the trader here if they bought something they didnt like it and sent it back (or changed their mind before being delivered).

"and also order goods through amazon but cancel it an never pay. "

The issue here is that he would probably be £5k a year better off by being VAT registered. That's a lot of money for a small business.
From HMRC's point of view it's not a lot but when added together there are at least 10 doing this in the same place, then it becomes more significant.

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Replying to djn:
By SteveHa
29th Sep 2021 13:31

djn wrote:

From HMRC's point of view it's not a lot but when added together there are at least 10 doing this in the same place, then it becomes more significant.

The rest don't matter. Only one is your client and you are expected to advise them correctly and in accordance with the law.

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Replying to djn:
By Duggimon
30th Sep 2021 09:54

I think if you know who the other companies are, or at least who they subcontract to, it's probably enough to submit an SAR.

As you rightly say it's VAT fraud plain and simple and should be investigated by HMRC, seems like an easy win.

Of course I'm sure nothing will come of it, but I don't think I'd be able to not report it to someone, makes my blood boil, especially since it makes us look like dafties when a client comes to us with this great and legal scheme that their mates know about but we somehow don't.

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Replying to Duggimon:
ALISK
By atleastisoundknowledgable...
30th Sep 2021 10:07

Duggimon wrote:

… it makes us look like dafties when a client comes to us with this great and legal scheme that their mates know about but we somehow don't.

It really infuriates me when I speak to a TR lead, normally a subby of some variety, who’ll trot out a version of “my mate just gives his accountant his hours and he does the rest and gets a big refund each year, and only charges his £50, why are you telling me I need to give you bank statements or keep any records and charging me more?”.

Anyways, I don’t ‘do’ self-employed anymore, unless I have to due to an existing relationship or link.

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