Turnover for Income Tax using VAT Flat Rate Scheme

Sandy Dog

Anyone know the answer to this?

If an electrician is VAT registered and completes a job for a builder under the CIS scheme for £250.00 excl VAT and his labour element is £150.00 then the builder should deduct £30.00 for CIS, making the invoice::confused1:

Work 250.00
VAT 50.00
Charge to builder 300.00
Less CIS £150.00 x 20% (30.00)
Payable by builder 270.00

Further, if the electrician is using the flat rate scheme at 9.5% then his VAT liability is £300.00 x 9.5% = £28.50 So after paying HMRC £28.50 of the £50.00 VAT the electrician is left with £21.50

Is the electrician’s income tax calculated on the £250.00 or the £271.50 (250.00 + 21.50) or other?

deanshepherd

£271.50.

Monsoon

deanshepherd wrote: »

£271.50.

Yep.

The VAT flat rate "profit" is taxable income.

AK002

Agree.

LynWest

Definately

Sandy Dog

Thanks for the advice. So, cynically, what the VAT man gives the income tax man takes away!

LynWest

I think it is their mantra