VAT - surely the solution is clear?
I read Optician and Optometry Today and all the suggestions about 'do nothing' and 'wait until we advise you' and scratch my head in wonder.
It has been suggested that spectacle prices should rise to pay over to the VATman. If not, the profession should 'take it on the chin' and pay over 8% of turnover for nothing.
What a peculiar 'profession' we are! The quote marks are intentional. No other profession I know charges out its time at a loss, and then tries to recover the loss from some other activity. Even solicitors aren’t that stupid!
Isn’t the solution quite plain? The one thing that has never been disputed is that the sight test is exempt from VAT. Wouldn’t you and your clients pay less VAT if the sight test was charged at a proper, profitable rate, and your spectacles charged at a proper, profitable rate (but not subsidising the losses elsewhere)?
Of course! Brilliant! But nobody would pay, would they? No, of course not.
Except that they do. I joined Eyeplan a while ago, slightly sceptical but I thought the principle was sound. To my amazement, my clients bought in to the idea big time. My sight test fee is anywhere from £55 upwards (depending upon my clients needs). My spectacles are now 40-50% less in price than they were for those wonderful clients. Now, of course, every client I see under that scheme is profitable to the practice, and they receive first class care and real value for money.
Of course, this begs the question about the NHS remuneration. It won’t be long before I rip up the contract with the NHS – it is, after all, worthless. I am not prepared to run faster to go backwards.
Oh yes, and the VAT. Well, that’s not a problem, is it? Eyeplan has done exactly what Customs & Excise wanted – value what you do openly and clearly. I account for VAT on Eyeplan clients spectacles at full rate, but then the selling price is a lot lower, isn’t it? And my sight test income, now much higher, is exempt. And my clients all know exactly what I’m doing, and they choose to do it that way.
So don’t 'do nothing' and you might still have a business after June 1st!