VAT Registered

[Chrisfnvs]

With respect i would suggest at 30 colonies you would not have enough bees to have a business, HMRC are no fools they would be very unlikely to grant your request to become VAT registered as the intention to make a profit would be a primary condition of registration in my opinion, other wise everyone in the UK would register for their particular hobby to save 20%

 

[BMH]

Thanks for the detailed reply, Chris. Very informative.

Pargyle - ouch, sounds like you've had a hard time of it..

Maybe this isnt the best idea!

Who, if anyone, actually makes a profit from their hobby?

 

[jenkinsbrynmair]

Maybe this isnt the best idea!

Not really - I was the VAT registration officer for Bristol for a wee while some years ago and it wasn't the easiest thing to get set up - the saddest thing though was watching my colleagues opposite in Vat de-reg winding up all the businesses that had folded, before handing the files over to enforcement and the bailiff officers.
And it was a lot more straightforward in them days as well!!

 

[pargyle]

Who, if anyone, actually makes a profit from their hobby?

I suspect most hobby beekeepers are lucky to break even .. after a few years, if you have productive, healthy, colonies and more than about 40 hives and are happy to sit at that level, work yourself stupid looking after them in the season, have apiaries that are within walking or cycling distance, good foraging areas - particularly if you have heather nearby (heather honey attracts a premium), have a discerning clientele who are prepared to pay a sensible price for your honey, buy consumables and jars, in quantity, only when the price is right and have somewhere that you can store said consumables in pallet loads, a place to process all the honey and store it, are sufficiently fit to do all the physical bits of lifting and carrying, are sufficiently competent at woodwork to make up the kit you will need and .. YOU ARE VERY LUCKY ...

You might make a small profit ... but that will be eroded the following year when winter stops in June, all your hives immediately swarm and you have no spare kit to do anything about it and winter starts again in July...

There's an old adage in beekeeping ... if you want to make a small fortune - start off with a big one !

 

[Magwat]

If you are VAT registered, HMRC will want to be able to see from your quarterly returns that you are 'trading' i.e. they will look for income on your return. If they believe that you are not trading you will get a visit and you will need to practise your hoop jumping. This weeds out those who are claiming VAT back on hobbies.

 

[BMH]

There go my visions of an early retirement! Only 35 years to go!

Only kidding, I'd be happy to break even on a year by year basis.

Starting out is expensive!

Luckily I live within 5 miles of the heather, 300 yards of a river in a large village that has lots of trees and garden forage.

Shame its in North Wales and when its nots raining it struggles to get above 6c

 

[chrisb]

When I started out in Business the most painful thing was not starting up or the investment, nor was it the years of building it up or the long 7 day weeks. It was the day I signed the VAT registration form !
within two weeks I had two VAT inspectors pay me a visit. what a day good cop bad cop !
If you want to push a hobby to a business then do it but state that it is a part time business keep it straight and forget the vat until you have no option but to go there,
who ever makes a profit from there hobby ? first hand up is mine hobby went to business then onto Ltd company

 

[BMH]

Sound advice.

Cheers.

 

[alldigging]

Don't forget the new £1000 allowance
https://www.gov.uk/government/news/budget-2016-some-of-the-things-weve-announced

10. New tax allowances for money earned from the sharing economy
From April 2017, there will be two new tax-free £1,000 allowances – one for selling goods or providing services, and one income from property you own.

People who make up to £1,000 from occasional jobs – such as sharing power tools, providing a lift share or selling goods they have made – will no longer need to pay tax on that income.

In the same way, the first £1,000 of income from property – such as renting a driveway or loft storage – will be tax free.

 

[For want of a better word]

Don't forget the new £1000 allowance
https://www.gov.uk/government/news/budget-2016-some-of-the-things-weve-announced

10. New tax allowances for money earned from the sharing economy
From April 2017, there will be two new tax-free £1,000 allowances – one for selling goods or providing services, and one income from property you own.

People who make up to £1,000 from occasional jobs – such as sharing power tools, providing a lift share or selling goods they have made – will no longer need to pay tax on that income.

In the same way, the first £1,000 of income from property – such as renting a driveway or loft storage – will be tax free.

£20 a week is no big deal... when one considers what this government considers the minimum living wage to be!

Yeghes da

 

[charlievictorbravo]

There is an excellent Sticky here - http://www.beekeepingforum.co.uk/showthread.php?t=32799 that sets out many of the questions and answers in relation to beekeeping as a business - or not.

After reading that and the excellent post 18 above by ChrisB, you might want to have second or even third thoughts.

CVB

 

[midnight sun]

Penny's dropped I think....which is about the amount of profit I make in a year.

 

[tudor bees]

Hi, You have now got lots of useful information, now you need to go
to an independent accountant for Chat about your plans, most will give the
1st metting FOC. I have been registered and de-registered twice for VAT in the past 30 years, I have been Self employed in all that time. I like most self employed have an end of year meeting with an accountant. After we have completed my main business I then show the profit/loss, IE sales honey and nucs, any purchase of Beekeeping. I do this as many VAT/ HMRC Staff like honey, Jams and any thing that has come from a home address that is for sale. As we have to has put the our name and address on the jar we have done half the work for them. All they need to know are you paying tax on your sales
All the best
Simon

 

[Jack Straw]

VAT registration

I think it has already been said but I am happy to confirm that VAT registration is only available for businesses, to be in business you must be able to demonstrate that you are trading with the intention of making a profit.

If you have a loss making hobby then VAT registration is not available.

With regards to sales, foodstuffs are zero-rated and so honey held out for human consumption carries no VAT. However gifts/presents are standard rated and so where the honey is packaged in such a way that its primary purpose is as a gift - ie it is sold in a pretty box set or perhaps in a fancy bear-shaped plastic bottle this would be sold at price plus standard rated VAT. Other by-products such as candles and health/beauty products are standard rated for VAT purposes. Assuming that the sales are being made directly to the consumer then being VAT registered is going to increase the sale price or reduce the profit.

Generally I would suggest that VAT registration is not worthwhile until there is a reasonable level of return. There are quite a number of variables involved most especially the product being sold, whether it is being sold business to business or business to consumer and the value of standard rated purchases being bought. I think that most traders would consider it not worthwhile until turnover has exceeded say £10k

Although this forum is a good starting point I would urge anyone thinking of VAT registration to visit an accountant and take expert advice before committing themselves




My back ground is that I am a qualified accountant and tax advisor and a hobby beekeeper. Please feel free to PM me if you have any queries regarding the above

 

[pargyle]

I think it has already been said but I am happy to confirm that VAT registration is only available for businesses, to be in business you must be able to demonstrate that you are trading with the intention of making a profit.

If you have a loss making hobby then VAT registration is not available.
.....

My back ground is that I am a qualified accountant and tax advisor and a hobby beekeeper. Please feel free to PM me if you have any queries regarding the above

As always Jack, sound sensible advice from someone who knows and is qualified to know ... this and your previous post a year or two ago should be cast in stone on this forum ... it's a question that gets asked on a very regular basis.


http://www.beekeepingforum.co.uk/showthread.php?t=32739&page=8 Post#79 and Post #97