Just got our VAT number through! ooohhhh

picturecompany

Hi!

Our VAT number has just come through and now we have the task of changing our pricing. Obviously anyone of our current clients who isn't VAT registered will suffer because of the price increase. Question is do I simply slap 21.5% on top of every price or try and balance it out a bit to as remain competitive for non our VAT registered customers.

I didn't legally need to be VAT registered as we're not earning enough yet, but thought it a good idea as we wholesale out to registered businesses and it would certainly help our 'kudos' if you like and some have said they wont deal with non VAT registered customers.

Anyone recently done a re-pricing because of VAT? If so how did you do it?

Cheers in advance
Tim
(slightly scared)

sneakerfreak

I would take it on a client by client basis,they all have diffrent needs/requirements.

Im not suggesting breaking the law but if you are able discuss it with each one and you may find diffrent ways of dealing with it to ensure you keep them as customers.

Its a bit of work but may prevent them from going to other suppliers.

antoinolachtnai

It's really a matter of what the market will accept. Obviously, no change for the wholesale customers. But retail - really, I'd be surprised if there is appetite for an increase. If you increase the price, I'd be surprised if you don't lose some business.

You didn't say what you make/do/sell. Do you have VAT inputs which you will now be able to claim on? If you do, and these are at all significant, there will be some saving, and you shouldn't have to whack on a 21.5 percent increase to keep your margin the same.

patftrears

picturecompany wrote: »

I didn't legally need to be VAT registered as we're not earning enough yet, but thought it a good idea as we wholesale out to registered businesses and it would certainly help our 'kudos' if you like and some have said they wont deal with non VAT registered customers.

If the reason for registering was for the wholesale trade, then you should focus on this area.
You should be able to reduce your wholesale prices and keep profit levels the same, as you can claim the vat back on the costs of canvas, paints, acrylics, equipment that you use to make your product.

DublinWriter

OP - did you get the scary visit from Revenue prior to getting the number?

picturecompany

sneakerfreak: Thanks good advice!

antoinolachtnai: You're right. I'll totally over price all my products (for retail) if I just whack 21.5% on top of current prices. I sell canvas prints and acrylics by the way. What do you mean by this: 'Do you have VAT inputs which you will now be able to claim on?' Please excuse my ignorance.

patftrears: Yes, we thought that we may reduce the prices as all our suppliers are from UK and now we're VAT registered we don't have to pay the UK VAT which is great.

DublinWriter: Yes I did. They practically turned up on my doorstep unannounced. Two of them, a woman who did all the talking and a fat bloke who just stood there staring out the window. No craic whatsoever despite numerous attempts to lighten the mood. Would prefer not to have to see them again really! Don't think my nerves could handle a second visit!

antoinolachtnai

Your 'VAT inputs' are the vat you pay to your suppliers (for example, your UK suppliers) for the stuff you buy. If you buy supplies now you will not have to pay vat (from UK) or you will be able to offset the VAT (for goods from Ireland). This will obviously reduce your costs a bit.

If your business is scaling up, I'd have a hard look at my costs and make sure that everyone is giving you a really good deal, especially if you are in the habit of paying for cash.