New Furlough Rules Nov 2020 GK Client update
Business Owner Update 22nd May
Hey, we are live.
I think let’s see if this works.
So today is Friday and it’s the 12th of Feb and I want to make a couple of announcements for my clients.
As you know, I’m an accountant in the UK.
If you’re watching this anywhere else in the world, this first bit isn’t relevant for you…
The law is changing with regards to VAT for our construction businesses.
So, if you are a construction business, there’s a couple of things you’re going to need to know, and I’m going to cover that briefly and of course, I’m going to announce that my new web class is only two days away.
It’s [ON DMAND]. I’m going to be doing it on a Sunday morning before everyone’s up in the house.
And were they also going to do it [ON DMAND] after for those of you, who’ve got better things to do with your time on Valentine’s day than to listen to me, talk about how to get your business love you more would cover those two things.
https://successstorybuilder.com/business-in-love-free-webclass/
So the first thing I want to just do is cover off the VAT changes.
So in the past we’ve had some the situation has been, you know, you do work, you do construction work….
We’re talking about construction workers. …
You do work and you raise an invoice and if you’re VAT registered, you raise an invoice and you add VAT to it.
The receiving company who’s had the building work pay, this is in the construction area.
Not consumers who are getting the work done.
These other businesses you do work for, they would take your invoice, check the work is done, and then obviously pay you and they would pay you the full amount, including the VAT.
Well, that’s all changing.
We now get this thing called the reverse charge, and my guess is it’s coming in because a lot of builders weren’t paying the VAT and they were going out of business.
And so the government is losing lots of money and so how the thing works is this…
…
let’s take it from two different points of view.
First of all, let’s assume you are doing work for another construction company.
So you do work, let’s call it 20,000 pounds of dollars or £20,000 is UK, of course, £20,000.
I confuse myself because I deal with my consultancy business. I deal with UK and US and Canada and my accountancy business. I’m only dealing with the UK and with the tax business, of course the UK only.
So what happens then is you raise your bill for 20,000 plus VAT. 4,000 pounds for VAT, £24,000, the company that you work for a big construction company, you’ve just done a big job for them and not that big for 20,000 to be fair.
And they pay you 24,000 pounds, job done.
You declare your VAT everything’s good.
The situation has changed in that.
You now raise the invoice in the same way, 20,000 plus VAT 4,000, and they will only pay you £20,000.
They will not pay the extra 4000.
So you’ve now got to change your accounting procedures for the extra 4k… you’re not going to be getting, because your invoice will say your due to it, that you’re not going to get it.
So you need to activate it and if you’re using online accounts like Xero or QuickBooks, Xero with an X, then of course you will be fine and they will have within the software, the right boxes to tick so that it’s adjusted for you.
If you’re doing it manually, its a bit more complex.
There’s no reason not to go for these online accounts nowadays and if you’re using a desktop software like Sage or, or a QuickBooks desktop, then of course you need to make sure it is updated for reverse charge VAT.
We don’t have any clients who, except one, actually one client that uses the desktop version.
Everyone else uses the online version.
Anyway, it’s adjusted for you.
Alternative situation
So, the second one is you are the big construction company, somebody else is billing you for the work they’re doing for you.
They will raise the the invoice.
You again would normally have paid them 24,000.
Now you’re only going to pay 20,000 and the extra four.
You’re going to put it on your VAT return.
Okay. So you’re going to pay directly to HMRC, not to the person that’s just done the work for you.
So let’s quickly talk about cash flow.
For cash flow. There’s a couple of things.
First of all, you are the big company having work done by someone else. You’re going to notice a slight temporary cashflow improvement, because you’re not going to be paying this VAT straight away to this company has just done the work.
However, don’t feel too smug because if you spend that money and the VAT return comes in and you’ve got to pay it out, you’re going to have a cashflow issue, okay?
Now, on the other side, if you are a small contractor doing work for a larger contractor,
You’re not going to get that VAT.
It’s going to seem a little bit hard, because you’re not getting the VAT money.
However, The way I talk to clients about it is it’s never really your money.
You’re holding it on behalf of HMRC and so really it’s not your money anyway, but I know it’s a hard, but it’s a really good discipline to get into the, into this way of thinking about it.
All right. So that’s it for the reverse charge.
Now, want to just talk to you a little bit about the upcoming web class.
Getting Your Business To Love You Back
There’s only two days to go on Sunday.
I’m going to be running a web class on how to get your business and love you even more, what does that mean?
It means, well, in fact, what I’m going to do is I’m going to direct you to my life I did in my consulting business success story builder, we help build businesses, success stories, you know, what success story looks like right?
I used to have it really tough. I worked really hard.
This is my story, right?
I said, work really hard.
I wasn’t taught how to run a business.
I was working day and night.
I was working seven days a week and wasn’t seeing my family and then I began, I discovered a whole range of strategies that helped me do only the things I loved to do less work, earn more, give better service and really enjoy my business.
And my business should be, it loved me back because I could take loads of holidays.
I was not stressed out.
I didn’t have any cashflow issues.
The business was growing.
So gave me a lot of joy.
I was impacting more clients.
Fantastic. Love that.
And so that’s my success story, right?
So as what we do, so if you go to success story builder, I did a live just a moment ago.
So you’ll notice the shirts exactly the same.
I’m not that organised.
I’m going to change shirts between recordings within three minutes apart.
So, and you’ll get that and you’ll see a little bit about what that means.
What is a business that loves you.
I’ve given you the clue in my story, but you’ll get, you’ll get more of it if you go to that.
All right. So I’m happy doing this early on a Friday because, it’s sunny outside, but it’s freezing.
So I want to get a fire going to get all cozy and I’m going to watch a film with my misses and we’re going to be celebrating, you know, Valentine’s day on Valentine’s day.
Today is going to get, keep warm day because it is freezing and so I look forward to seeing you then
On, if you are to, you can join me on Sunday live, brilliant.
If you can’t do it on Monday, I’m doing another live Monday afternoon, UK time and so you got two opportunities…
… or you can get the recording and then you can ask some questions.
All right,
this is Gordon and wishing you well.
You take very, very good care of yourself and keep warm if you’re in the UK
All the Best
Bye-Bye.
Ask for help if you need it
Follow us on Facebook!
