Non VAT registered company trading with VAT registered one??

[zahadoom]

I have been puzzling over this.
If you are starting a small company and you are not VAT registered either because you don't turn over more than 1 million Rand a year or you turn over less than R50 000 or you fit somewhere in between and simply could not be bothered.
What do customers of your company do if they are vat registered and you are not? Surely they cant claim anything back so is there a loss in the story or am I missing something?

 

[bromster]

Correct. They may ask for a 14% discount to offset the fact that they can't claim the vat back. They may insist that you register for vat before dealing with you. It is tough for small businesses to land big clients.

 

[zahadoom]

Correct. They may ask for a 14% discount to offset the fact that they can't claim the vat back. They may insist that you register for vat before dealing with you. It is tough for small businesses to land big clients.

Is it good etiquette to warn potential clients that you are not VAT registered? I assume some will figure it out when they don't see a VAT number any where but I am certain some will only figure it out when the get a invoice with out a number.

 

[bromster]

No. If your quote or invoice doesn't have your vat vendor number on it, then they should assume that you aren't registered.

 

[Pixelbender]

No. If your quote or invoice doesn't have your vat vendor number on it, then they should assume that you aren't registered.

If you get an invoice for goods/services delivered by the smaller company and only then notice that they're not registered for VAT, that may pose a problem. If your margin is small and they try to claim a discount of 14%, youre going to lose.

I'd rather include the fact that youre not registered for VAT somewhere, like in the contract / terms (fine print), beforehand.

But no, you don't HAVE to tell them, but I'd rather do it... somewhere...

 

[bromster]

Yeah. I guess the last thing you want to do is irritate them. Maybe just include a VAT number block on your invoice and put N/A in it.

 

[komanta1]

Hi Zahadoom,

If you are not VAT registered then you can not charge VAT.
If a company requests a VAT number etc then mention that your company is not VAT registered, and tell them you havn't charged VAT so there is nothing to claim. If you hadn't charged VAT then there is no need for them to claim. Companies usually understand this and should not have a problem with it. I have dealt with large companies and no one has ever had an issue.

 

[maumau]

what if you've been paying VAT to a company and when you check on the official website the number doesn't exist or they haven't updated for 6 years?

i.e. the government website is where i checked