Cash Accounting & Flat Rate VAT

jackieshep

From the next VAT quarter the company I am working for are hoping to change to Cash Accounting and Flat Rate VAT.

The steps I think I need to take are:

1. Process dummy credits for all sales invoices and purchase invoices that are unpaid.
2. Tick box for cash accounting on "Company Preference"
3. Put sales invoices back onto system with 17.5% VAT as I use Sage generated invoices.
4. Put purchase invoices back onto system and make sure the records are set at T9 rate.
5. At next VAT return date calculate VAT as per normal which should show purchase VAT as zero and sales VAT at 17.5%.
6. Prepare return manually calculating sales VAT at flat rate % of box 6 (total value of sales excluding VAT).

Could I please ask that somebody check that I have worked this out correctly.

Many thanks

AK002

What version of sage are you using? If i'm not mistaken the lastest version has a function to allow proper Flat rate calculations.

AK002

Also, you'd need to watch that the invoices that have previously been processed will have already had VAT paid/reclaimed.

jackieshep

Hi there,

I'm using Sage 50 Accounts Professional 2010 version 16 which we get through Barclays. Where would I find the flat rate function for caculations?

Rozzi Rainbow

jackieshep wrote: »

6. Prepare return manually calculating sales VAT at flat rate % of box 6 (total value of sales excluding VAT).

Could I please ask that somebody check that I have worked this out correctly.

The flat rate % is applied to total taxable turnover i.e. total value of sales plus VAT. If you don't include the VAT here you are effectively keeping the VAT you have collected from your customers.

I agree it seems a bit strange to be charging VAT on VAT, but they way I look at it is to use an example of a shop where they don't charge an amount + VAT as such, just sell for a total of say £10. Under the normal VAT scheme you would calculate sales VAT at 7/47 of the gross total (then deduct purchase VAT). Under the flat rate scheme you calculate at the FR% of the gross total.

We have recenlty upgraded to Sage version 17 (2011) which calculates the flat rate VAT.

AK002

Also watch for any bank intrest received as this is also counted as turnover for the FR calculation.

jackieshep

So in effect I add box 1 and box 6 together and times the total by the flat rate %?