Setting up a honey business

[TOBY-3652]

Seconds ftom the sales// thats where most of mine come from.. Good quality seconds from t..rne.s

 

[Chris B]

If you are commercialising up, where do people suggest hives are bought from?

Depends on volume and what hive type you already have.
But for me, factoring in the time to assemble flatpack hives made it much more expensive than buying readymade, and that narrowed the choice considerably.

 

[MartinJG]

Any commercial bee farmers out there, I have some questions

My hobby as now grown to the extent that I am considering converting it in to a business to keep the tax man happy.

I have 20 hives with bees, the going rate seems to be about £300 each. I therefore have £6000 plus another £2000 of equipment.

On day 1 of the business am I able to bring in £8000 of fixed assets ?

What period do I depreciate the hives and bees over ?? I was thinking about 10 years (how long does a hive last - could be 100 years if looked after). or do you write off the bees in the first year and just depreciate the hive?

With depreciation charge of £800 for this year I recon ive made a loss of about £500 which can be offset against future profits

What about bee books, I must have about 30 of them, can I bring them into the business.

Seems a good idea to register for VAT as well in order to claim back on equipment purchases.

A good accountant is a must: we pay £400 for our tax returns (business + personal). Reads like you have some idea of accounts so if you can keep a balance sheet and a budget it helps to keep costs down. Fixed assets: hive equipment, transport, depreciation over 10 years quite acceptable (it is an accounting tool after all).
VAT returns on line every 3 months, useful when buying in a lot of equipment, petrol etc; remember honey is vat exempt.
Books, education, membership etc is usually offset each year, but ask your accountant.
Also consider going Ltd.

 

[jenkinsbrynmair]

remember honey is vat exempt.

No, Zero rated, so they could change the rate in future -
if it was exempt you couldn't claim any VAT back on capital outlay or running costs - or even register in the firsat place

 

[pargyle]

No, Zero rated, so they could change the rate in future -
if it was exempt you couldn't claim any VAT back on capital outlay or running costs - or even register in the firsat place

I used to own a company that exported educational equipment to Africa - our export sales were VAT Exempt but we claimed any input VAT paid on our return and usually got a cheque (days before internet & bank transfer) back from HMC & E.

So .... isn't honey (VAT zero rated) going to be the same ? HMC & E + IR will love that won't they ? ...

Double Trouble - make a loss, claim the loss against other earned income AND claim back the input VAT on fuel, equipment and any other thing you can think of ...

You will have your own personal inspector following you 24 hours a day I would think !!

PS: Isn't registering for VAT dependent upon turnover ? I don't think it specifies whether turnover has to be VATable ... no doubt someone will know ???

 

[dpearce4]

I used to own a company that exported educational equipment to Africa - our export sales were VAT Exempt but we claimed any input VAT paid on our return and usually got a cheque (days before internet & bank transfer) back from HMC & E.

So .... isn't honey (VAT zero rated) going to be the same ? HMC & E + IR will love that won't they ? ...

Double Trouble - make a loss, claim the loss against other earned income AND claim back the input VAT on fuel, equipment and any other thing you can think of ...

You will have your own personal inspector following you 24 hours a day I would think !!

most the kit you buy has vat, plus jars and stuff all do so you would get a lot back if you wanted to.

Bugger all they can do if its legit purchases to.

 

[pargyle]

Yep ... Honey comes under the category 'Sweeteners' which are zero rated. So, if your turnover warrants it (and you are prepared to put up with the crapfest of quarterly returns, VAT inspections and the general Spanish Inquisition that goes with it) then you could claim back the input VAT on anything that attracts VAT ... as you say, Jars, equipment, treatments, tools, fuel .... could be quite a bit.

 

[jenkinsbrynmair]

PS: Isn't registering for VAT dependent upon turnover ? I don't think it specifies whether turnover has to be VATable ... no doubt someone will know ???

Over a certain turnover of VATable income it's compulsory (don't know what it is at the moment) exempt items aren't considered vatable, if all your turnover is exempt you cannot register and cannot claim any of the VAT back, there's also partial exemption rules, don't ask me all the details - it was a long time ago. You can register voluntarily if you're under the threshold but unless you're a 'repayment trader' say a butcher who'se sales are zero rated (unless he sells hot food in which case those sales incur tax) so he gets repaid all the VAT he pays on purchases: equiment, utilites, fuel etc. you would be a lunatic to do this.
I think you will find that your export sales were zero rate, not exempt, otherwise you could not get your VAT repaid.
By the way - don't ask an accountant: I have never met one who had a single clue about VAT law, which is why a lot of officers in my time used to leave the department to be employed by large accountancy firms as VAT specialists.

 

[pargyle]

Over a certain turnover of VATable income it's compulsory...

. You can register voluntarily if you're under the threshold but unless you're a 'repayment trader' say a butcher who'se sales are zero rated (unless he sells hot food in which case those sales incur tax) so he gets repaid all the VAT he pays on purchases: equiment, utilites, fuel etc. you would be a lunatic to do this.
.

If your sales are more than £79,000 in the last 12 months you would normally be expected to register for VAT.

So ... your butcher analogy is a good one ... very similar to honey sales ... Honey, like fresh meat, is zero rated ... so you get your input tax back on anything that you purchase that has VAT attached to it but there is no output tax on the honey you sell ... therefore you are better off ? However, the one difference is that the cost of goods in beekeeping is not as tangible as in buitchery - it would be more analagous if the butcher reared his own meat and then sold it. Bees are zero rated so there's no VAT on them whether you buy or sell them .. but propolis, pollen, royal jelly and wax are not classed as food and therefore attract VAT.

However, hell will probably freeze over before I get honey sales of £79k in a year ... £7.90 looks more likely at present !! So somewhat academic - but the OP was looking for advice and there may be some on here who already meet or get near the VAT threshold ?

 

[Finman]

However, hell will probably freeze over before I get honey sales of £79k in a year ...?

With one hive honey you can greese the extractor and sieve system. From second hive you may get some output.

.

 

[Chris B]

Worth mentioning also that if you are VAT registered and you buy goods from the EU, then you never part with the VAT in the first place i.e. there is also a cashflow advantage of a few months.
The way it works is you quote your VAT number to your supplier who will then not add VAT to your order. You have to account for it properly on the quarterly VAT return but the money never leaves your hands.
As for the VAT return itself, on good days I can work out what goes in each box, on bad days I have to walk away and chill a bit. I've submitted late once or twice and then got a bill for an estimated amount (thousands of pounds) which is then rescinded once I get the return done. Sailing a bit close to the winds perhaps. I started using Sage instant accounts last April and that's taken much of the stress out of this sort of thing. Now I just have to make sure I log everything against the right tax code and Sage does the rest.

 

[farbee]

[

However, hell will probably freeze over before I get honey sales of £79k in a year ... ?[/QUOTE]

Certainly true if you have only 1 hive.

 

[ROACHMAN]

Seems to me that its a no brainer to register for VAT. There must be more to it

As someone mentioned, I dont think HMRC would be too happy paying back VAT especially if the business is also making a loss and getting a tax rebate as well

I think I need a good accountant but the turnover doesnt justify it - yet!

 

[Tom Bick]

[

However, hell will probably freeze over before I get honey sales of £79k in a year ... ?

[/QUOTE]

Perhaps you are right but as far as I know its turnover at £79k and not just sales. Also vat is based on quarterly and I understand or have things changed, if you exceed £19750 turnover in one quarter, then you could have a few questions to answer.

 

[Bates]

Well they won't let me register for VAT because I only sell vat exempt bees? I'm in a dispute atm about it all, could save us thousands in equipment costs etc.

 

[Tim1606]

We got inspected by the VAT man in November.
Thought as we have had 4 rebates in a row that was what is was about. Apparently we were just 'randomly' picked out for inspection.
Had the balance sheets etc from the accountant plus for some unknown reason he wanted to look at all the V5 docs for the vehicles. Didn't ask him why, he glanced at them and gave me them back. (wondered incase he thought i had a Porsche or Ferrari hidden in the garage) After a few taps on the laptop he said everything was fine and left.
Feel good now, but wonder how long before we are 'randomly' picked out again. Have a return to submit soon and it looks like another rebate.

 

[clv101]

Double Trouble - make a loss, claim the loss against other earned income AND claim back the input VAT on fuel, equipment and any other thing you can think of ...

You will have your own personal inspector following you 24 hours a day I would think !!

This does seem perfectly legit though? Run a small hobby beekeeping business, any losses offset against other earned income and register for VAT meaning most purchases are -20%.

Little bit of paperwork could be worth over £1000 - why don't more people do this?

 

[Tim1606]

This does seem perfectly legit though? Run a small hobby beekeeping business, any losses offset against other earned income and register for VAT meaning most purchases are -20%.

Little bit of paperwork could be worth over £1000 - why don't more people do this?

According to our accountant, if the VAT man thinks it is a glorified hobby they will de register you.

 

[pargyle]

Perhaps you are right but as far as I know its turnover at £79k and not just sales. Also vat is based on quarterly and I understand or have things changed, if you exceed £19750 turnover in one quarter, then you could have a few questions to answer.

Turnover is the amount of money taken by a business = Sales (Same thing).

You are quite correct about the quarterly limit ... if your annual sales do not meet the annual limit you can, in that situation, apply to de-register.

I think that you would only want to consider registration when it looked like it was going to be a viable 'business'. The HMRC will be all over anyone who continually claims VAT back and has a low turnover. Their 'random' checks are driven by computers these days which have algorythms that throw up 'anomalies'. They check your declared figures with the averages for your industry and if your figures don't meet their expectation of what it 'should be' then you can look forward to the bloke in the suit standing on your doorstep.

Big brother IS watching you ... despite comfy offices and cuddly officers these days !

 

[pargyle]

Well they won't let me register for VAT because I only sell vat exempt bees? I'm in a dispute atm about it all, could save us thousands in equipment costs etc.

Bees are not VAT Exempt ... they are Zero Rates - there's a difference.

http://customs.hmrc.gov.uk/channels...HMCE_CL_000124&propertyType=document#P35_1179

If HMRC are saying you can't register because bees are VAT Exempt that's wrong and I'd argue the case.

If you sell them in a Nuc or hive then you are into another situation as the Nuc or hive carry VAT at the standard rate and will have to be accounted for as such, There are situations (where the bee packaging is disposable) that it can be ignored for VAT purposes but it's a bit of a complex area.