h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

Currently there's a campaign about not leaving dogs in hot cars, so of course I support this. I offered a financial contribution, and although I didn't mention a figure I was upping someone else's £350 donation to £650 so more of the leaflets could be printed. That's £300 right?

When I've had the invoice through the post they've added VAT making it £360!

So I added a note commenting that my offer was £300 so that's what I've paid. I expect my link in the 'sponsors' bit of the website will vanish, but really, it's taking the piss. £300 was a bit of a stretch for a micro-business as it was!

I guess they are assuming that you can claim the VAT back. But as far as I understand it, if your business is too small to pay VAT you can request them to reinvoice you without it. Or similar.

Either way, that's a pretty generous donation you made. I hate to see animals in cars on hot days.

Possibly as I am donating as a business they think I'm VAT registered. But surely they know the threshold is nearly £80K now! How much dog walking do they think I do. If they can reinvoice without it, that's a relief. After all, if they pay it, they can claim it back, while I can't.

Eighty grand. I can't remember what the threshold was when I was in business but I remember crossing it and thinking " yeah " and "Oh " both at the same time.

I was happy because I knew I was going to be able to claim back the VAT on all the timber, machinery, tools, supplies etc that we bought, but hesitant about all the paperwork it was going to involve, and...

The inspections

My Dad always used to tell me that he'd remember his army number until the day he died. My VAT number is similarly etched on my brain for the rest of my life. No matter how much I might complain about the Texas Alcoholic Beverage Commission and their ridiculous rules, and even though they carry guns, HM Customs and Excise (who enforce VAT, or did back then) make them look like little old ladies.

Because I 'sell' to customers I have to try to avoid registering for VAT. If (hahaha) my turnover ever gets that high I'd have to somehow split the business up into smaller businesses. I think I'm a couple of years and a few members of staff away from that.

It was bad planning and VAT that got my dad when he started his business. He registered, just before he had to, even though he was also selling to customers, then every three months went into a huge panic as he had no money to pay the vat bill. Money burns a hole in my dad's pocket - if he's got it, he spends it. That's what led to the constant begging from his parents, then finally he had to remortgage the house to pay it. After that he slept at the taxi office, grabbing sleep in fits and starts because the mortgage had gone from £100 a month to £500 (and this was 25 years ago) and he struggled to pay it, which lead to tiredness and car crashes, leading to more expenses... He made my mum do parcel deliveries, she was a childminder at the time, and more than once was out somewhere with kids when their mum's wanted to pick them up, she had to give up, then he made her get a licence and do airport runs which annoyed all the drivers working for him, so they slowly left, he had 3 of his kids working for barely anything (in my case, actually nothing) so we didn't give a toss if we did a good job or not... All went a bit pear shaped really.

So anyway. I've made sure my cashflow is always top of my priorities.

I think that's a sensible attitude, Mina, if you an keep on top of the cashflow and the paperwork then you're laughing. VAT wise anyway (the company I work for used to be registered for UK VAT and we used to get a visit once a year from a very nice Scottish lady - but she was like a steel vice when she got her teeth into something she thought was irregular or wrong. Luckily we employed a German accountant who specialised in that kind of thing, so I never had to sort anything out (and we never did anything wrong anyway) but I can sympathise with anyone who gets a VAT inspection.

And it is like one of those things with stay at home mums. Nobody values the work of the person who keeps the paperwork in order - until they need it to be in order and nobody has done it.


Is there anything you can do about that 60 quid on the invoice?

I've just ignored it to be honest! I've offered £300 and that's what I paid. I've put a note on it, and attached the emails where I offered the £300 so my accountant will know why there is a difference. Once they get the cheque and the letter they can moan, but I don't think they can chase me for a donation I didn't offer? If they'd said 'plus vat' then I would have known how much I was offering.

I wouldn't mind, but the item I'm 'paying' for is too small to have a logo or my business name on so I don't really get anything out of this. Just goodwill, and a link to my website from theirs.

If you simply made a pledge, with no contract of any kind other than verbal, and if they made no mention of adding VAT to your pledge (not sure how they can do that, legally), then all they can do is accept your £300 and take VAT out of it. But I'm not a lawyer so don't quote me on that.

I used to sell to people too - I made and sold furniture. For the first few months we were doing quite well and we somehow actually had a surplus after we paid the VAT bill. But then things went south and every three months it was a struggle to make the payment in time without incurring penalties.

All I can remember is input tax and output tax, and you subtract one from the other and the difference is what you pay. Somehow there was some left over... for us. Let's see if I can figure this out.

Input tax is what you pay on materials and supplies, output tax is what you charge on finished goods and collect for the government. Since the output tax should be more (because you've made something from the materials and therefore 'added value' to it and are charging more than the cost of the materials (it's not called 'value added tax' for nothing), and the output tax is what you pay, minus the input tax you were charged, so the difference is what you get to keep.

Sounds weird, but that's how it worked for us, at least for a short while.

Here's the important bit of the emails:



I was just thinking about it, not wanting to jump in without thinking then saw your tweet that 50,000 has been sponsored. If it'll help, I'll top that up to the 100,000, or don't you need that many? I was trying to work out how many I could afford, and this solves that problem!



On 01/08/2011 17:13, Magazine Editor wrote:

FW: Don't Cook Your Dog Campaign

Hi Mina

Would be wonderful if you can help – here’s the two latest projects. The double-sided credit card one will only take £250 to achieve a 25,000 print run of business cards. But as it is so small there’s no room for a logo on the card but we can give credit to the sponsor on the website and magazine with a supporting quote. £350 for 50,000. £650 for 100,000.

On 1/8/11 17:35, Mina wrote:

I was just thinking about it, not wanting to jump in without thinking then saw your tweet that 50,000 has been sponsored. If it'll help, I'll top that up to the 100,000

End quotes...

So no figures actually mentioned, but 50,000 was £350, 100,000 £650. Difference = £300 And NO mention of VAT.

I remember my dad being annoyed he had to collect taxes for the Government! As you were selling items your turnover would be higher - as I'm only selling my labour, turnover is quite low.

I had no problems with being a tax collector. If you're in business, and if you're selling a product or a service, and if there's a sales tax (or VAT), you're a tax collector. Ain't no way round it.

Your turnover might be relatively low, compared to someone who's making and/or selling a product, but your overheads and expenses are comparatively lower. Fewer raw materials to buy, fewer tools and machinery, fewer running costs. I always envied a friend who was a piano teacher. He had virtually no outgoings! He'd go to people's houses to teach them (or their kids) how to play Beethoven's Moonlight Sonata or Mozart's Rondo a la Turka... and that was it. His only expense was a travelcard.

He had a piano at home but it was an old upright that he got for nowt.

I would have low outgoings if I didn't love my job, and dogs, and so keep buying toys and games. Someone (not a dog owner) saw my photos and said 'but they're dogs!?' as if they shouldn't be allowed to play games and do interesting stuff.

But you're right, apart from the van and fuel, and a few 100 poo bags it's low cost, but that also means the business has no value. Which is why I'm taking on staff to try and build something decent. At the moment if you take me out of the picture there is no business.

oh oh oh, pick me, miss, pick me!!
(currently doing a social sciences course)

That depends how you define Value, surely, Mina? Of course, the intrinsic value might be low, but your business has a high use value to the people who use your services, and a high emotional value for you.

(my tutor would be so proud of me)

What I mean is ... The service (me) is highly valued by all the dog owners, but if I break my leg and have to give up dog walking for 6 weeks, there would be no business as all the dog owners would find another dog walker. So, the business itself has no financial value, all the value is in Me.

By taking on my new dog walker, Ms J let's call her, the value shifts from just Me because she will be covering my lunchtime shift. The business could continue without Me. The trick is, to make sure she is offering a fabulous service just as I do, which I'm doing by taking a lot of time to train her - not just going over the driving and walking routes, handing out keys and giving her the dog's names. I've already spent two weeks walking with her, and she's due to take over from September, although there should be a few days she's out on her own (with an assistant) before then.

That's when the business starts to become worth something in a financial sense. If one of us breaks a leg, the customers will have no idea because things will go on as usualy for them.


It really helps getting it down in writing. And once Ms J has been with us a while, I hope to take on another person and get another van - I'm aiming for early 2012 to have at least two vans running around working hard.

Oh yes, and a daycare & training centre, summer 2012!

And yes, the first day T and Ms J took the dogs for a walk alone while I sat in the van in the car park I spent the whole hour crying my eyes out. Emotions. Pah.

From tiny acorns, Mina, tiny acorns.