Hitting £90,000 in turnover should be a huge celebration for your salon. For Phil Jackson, it nearly destroyed his business. He missed the VAT threshold for nine months, leading to a massive backdated bill for money he'd already spent. Don't let this happen to you.

In this episode, Phil shares his costly mistake and gives you the exact steps to proactively manage your salon's VAT, avoid a surprise bill, and ensure your business grows profitably.

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📊 MAIN CONTENT:

THE ROLLING 12-MONTH VAT THRESHOLD

• The £90,000 VAT threshold is NOT based on your tax year or company year end.

• It's a rolling 12-month period: you must check your turnover for the previous 12 months *every single month*.

• Once you cross £90,000, you have 30 days to notify HMRC. Registration kicks in from the first day of the second month after crossing.

PHIL'S £10,000+ MISTAKE AND ITS CONSEQUENCES

• Phil delegated, then abdicated, trusting his accountant to track the threshold.

• He crossed the threshold but didn't know for nine whole months.

• HMRC backdated his liability, demanding 20% of all revenue taken during those nine months.

• The money came straight from his business reserves, cleaning out his emergency fund.

WHAT TO DO IF YOU'VE ALREADY MISSED THE THRESHOLD

• *Act fast:* Go back through records to pinpoint when you crossed £90,000.

• *Call your accountant immediately:* Make a voluntary disclosure to HMRC to show you're fixing the problem, which can prevent penalties.

• *Reduce your bill:* Work with your accountant to reclaim VAT on purchases (equipment, stock, coaching) made during the period you should have been registered.

• *Talk to HMRC:* If you need a payment plan, engage with HMRC directly. They prefer to find a solution than push you into bankruptcy.

PREPARING FOR VAT REGISTRATION AND GROWTH

• *Gradual price increases:* Don't wait for a 20% cliff edge. Implement small, regular increases (e.g., 3-4% every six months) to absorb the VAT impact gradually.

• *Keep growing:* Between £90k and £110k, profits can be squeezed. Aim to quickly push past £110k towards £120k+ turnover to ensure strong profitability after VAT registration.

• *Explore the Flat Rate Scheme:* Discuss with your accountant. For beauty businesses, it can be 13% of turnover (12% in the first year), simplifying budgeting but meaning you can't reclaim VAT on purchases.

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📊 RESOURCES:

Get Paid Properly: getpaidproperly.com

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💬 WORK WITH ME:

1:1 Coaching: https://buildyoursalon.com

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🎧 LISTEN:

YouTube:  / @buildyoursalon

Spotify: https://go.philjackson.me/Spotify

Apple Podcasts: https://apple.co/3MZp6jP

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CHAPTERS:

0:00 - My VAT Mistake That Nearly Ended My Business

0:50 - The Truth About the Rolling VAT Threshold

2:00 - Why HMRC Backdates Your Salon's VAT Bill

3:10 - The Cost of Missing Your VAT Registration Date

4:00 - The One Habit to Avoid a Huge VAT Bill

4:50 - What to Do If You've Already Missed It

6:00 - How to Reduce Your Backdated VAT Bill

6:50 - Talking to HMRC About Payment Plans

7:30 - How to Manage Salon Price Increases for VAT

8:40 - The Flat Rate VAT Scheme for Salons

10:10 - Your 3 Immediate Actions for Salon VAT

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#SalonVAT #SalonPricing #SalonBusiness #BuildYourSalon

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Questions? phil@buildyoursalon.com