Vat "Free" Days, how??

Jonny303

Hi,

I have recently taken over a salon with my partner, she's working, i'm doing behind the scenes. I am registered for VAT.

It seems to be the norm in the beauty industry for them to have "VAT free days". How does this work? I can't get my head around it, but all I know is, it seems to benefit everyone bar me, am I correct?

Looking at it, it looks like a 21% discount, with the exception of those VAT registered?

Thanks for any imput,

Jonny

greendom

Yes you still pay vat on the sales you make - its basically a 21% discount you're giving to your customers.

Da GOAT

basically, its a 'we pay your vat day'

Wereghost

Not really. The VAT content of any expense is really only of relevance to the purchaser if they incur it in the course of their own taxable business activity or qualifying business activity, 'coz then they can reclaim it. Giving the consumer a discount equivalent to the normal VAT content is seemingly just a publicity stunt that hides the fact that the price of the product is deemed to include a notional VAT figure anyway - or, if they really are just failing to include VAT, it looks like a case of fraud.

Alternatively, maybe the salon is providing freebies (eg industrial samples). Gifts of goods are generally not VATable as long as no one customer receives more than €20 worth in total.

tenchi-fan

Cut wash and blowdry on regular day.. €54.50.
Breakdown: €50 + €4.50 VAT (9%)

Cut wash and blowdry on VAT-free day.. €50.00.
Breakdown: €45.87 + €4.13 VAT (9%)

They lied to you!

Besides, I'm pretty sure a lot of salons have VAT-free days given the cash nature of the business.

Jonny303

Thanks for the replies,

So from what I can pick up on that, my suppliers are giving a 21% discount to people not registered for VAT, while I am paying pull price, as I am registered for VAT.

Invoice example: says

Goods €10
VAT €2.10
Total €12.10

Now if I ask for a VAT invoice, this is what I am given, and I am charged 12.10 where as somone not looking for a VAT recipt is charged €10.

Just to clarify also, my sales I have no confusion with, its just the purchases. This cash run industry is a nightmare, ask some suppliers for recipts and their jaw hits the ground!

Should I not be getting one of the below,
(A) Paying €10, and recieving my invoice for €12.10 (ie. they pay the vat, and I benefit by being able to claim it back)
(B) Getting a 21% discount on the net price of €10?

The way I see it, the unregistered person is reciving discount, while I recieve nothing? Am I correct?