10 May 22 - Busting the VAT myth! - VAT registered companies can be cheaper!

VAT is never as expensive as you think and isn't just a case of adding 20% to the existing bouncy castle price structure. A bouncy castle generally works out at the same price and often works out cheaper £1 for £1 to buy from a VAT registered bouncy castle & inflatable company as they have access to VAT expenses that are otherwise trapped in the materials and overheads of a non-vat registered bouncy castle company.

Its a common misconception that those who are VAT registered simply add 20% vat to the existing price when they go VAT registered. In our case, we added 5% which has actually become negative over the last few years and helped drive the price down and as such, we are now much cheaper than we would be if we were not vat registered.

The reason some VAT registered bouncy castle manufacturers have higher prices is not due to VAT, It's generally companies who have been around a lot longer, fully understand business, are financially savvy enough to only deal with VAT registered companies themselves to lower expenses and maximise returns and have learned the hard way over the years to avoid certain materials and quick manufacture techniques that lead to issues down the line and to ensure the future of the company.

Our 11x15 velcro castles, for example, are only £795+vat because we have been able to reclaim the 20% VAT back on the buildings Rent, Rates, Electricity, Gas, Office Equipment, Engineers costs, Sewing machine costs, PVC costs, Webbing. Thread, D rings, Buckles, Print machines, Computers, Ink, Paper, Cutting machines, Packing machines, Palettes, Couriers, Shipping companies, Stationary, Training courses, Website, Internet, Power, Company vehicles, insurances, Staff training courses, Service contracts, Blower costs and everything else on top. This VAT registration allows us to buy materials 20% less than most non VAT registered bouncy castle and inflatable manufacturers ensuring chapter production, without cutting corners.

As a VAT registered business, We have made a 20% claim back on 95% of the costs associated with the manufacture, meaning we can sell the product for the lower price as follows:

• The original manufacturing cost of the 11x15 was £871.60 inc vat.
• Removing the VAT reclaim element (£145.27) makes the cost £726.33
• Adding our 12% profit target makes the price £798.96 (Rounded to £795)
• Adding VAT to the total makes the total price £945 inc vat
• The sale price as a VAT registered company is £795+vat (£954)

mmm

I hope this example makes sense and your now asking why aren't all bouncy castle manufacturers VAT registered and how are they doing things so cheap when they aren't being handed upto 20% back along the way? The cost savings have to come from somewhere. but where?