Flat Rate VAT Scheme

BIG WAL

As VAT is calculated on the total income including VAT (at 15%), and applying the the relevant Flat Rate percentage, will the sales income for the accounts be the total VAT inclusive income less the Flat Rate VAT paid ?

For purchases and expenditure will the total for the accounts be the amounts, including VAT, as charged by suppliers ?

To confuse me further, my client is posting purchases and expenses in Sage using T1, so the P & L account shows net rather than VAT inclusive amounts.

Any clarification will be appreciated.

AK002

According to someone at work its a bit of a pain doing the FRS on Sage...never was shown how to do it tho..

But yes sales in accounts = gross sales less VAT FRS %

and all expenses are shown gross.

NB: you can claim any VAT back on purchases larger than £2k, normally fixed assets etc.

BIG WAL

Thanks - that's a big help as I wasn't sure. Looks like I'll justify my fee having to sort out incorrect postings.

AK002

Have a look on the HMRC website for further info about claiming back large purchases

Always good when feeing if you can 'save' clients money in some other way..

groundy

Purchases on sage should be posted using T0, that way the inputs are correct on the VAT return but no VAT is reclaimed.

sheelagh

Frs

Inputs should not be recorded in Box 7 unless they are for capital expenditure on items costing more that £2000 (including VAT) Therefore expenditure should be recording using T9, unless it's high value capital expenditure.
see here
http://www.hmrc.gov.uk/vat/managing/returns-accounts/fat-rate-returns.htm#6

groundy

Sheelagh is right my mistake sorry

jilt

AK002 wrote: »

According to someone at work its a bit of a pain doing the FRS on Sage...never was shown how to do it tho..

But yes sales in accounts = gross sales less VAT FRS %

and all expenses are shown gross.

NB: you can claim any VAT back on purchases larger than £2k, normally fixed assets etc.

Just to clarify, if I have a sales invoice for £69 including VAT it should be posted as £63.30 plus £5.70 VAT

Sorry forgot to say the flat rate for this particular industry is 9%