VAT Flat Rate scheme + CIS Deductions

Sandy Dog

Hello

I placed this thread in the wrong forum yesterday. Some of you may have seen it so I apologise for its duplication.

Please will someone let me know whether the calculations below are correct or not? My main concern is whether the P&L account should show the VAT Flat rate element or simply the Net Sales less VAT Flat Rate element.

An electrician whose VAT flat rate is 9.5% carries out work for a main contractor.

INVOICE
Labour incl Emp’s NIC 60.00
Materials incl VAT 30.00
Mark-up 10.00
Value of Work 100.00
VAT @ 20% 20.00
Value of Work + VAT 120.00
CIS Deduction - Labour 60.00 x 20% (12.00)
Payment Due from Main Contractor 108.00


VAT Flat Rate Liability
Sales (incl VAT) 120.00
VAT Flat Rate 9.5%
VAT Liability 11.40


VAT Charged to Client 20.00
VAT liability (11.40)
“Profit” on VAT 8.60


Profit and Loss account
Sales incl VAT 120.00
VAT Flat Rate element (11.40)
Sales less VAT Flat Rate element 108.60
Cost of Sales – Lab 60.00 + Mat 30.00 (90.00)
Gross Profit 18.60
Expenses (0.00)
Net Profit (for Income Tax) 18.60

Simplistic Income Tax Calculation
Net Profit 18.60 x 20% 3.72
Rebate for CIS deduction (20.00)
Income tax refund due (16.28)

groundy

Looks good to me

T.C.

Me too!

Gem7321

We normally show turnover in the accounts as gross then flat rate vat as an expense

JodieR

my head's a bit fuzzy so excuse me if i've got the wrong end of the stick here, but why, on your second last line have you got rebate for CIS as £20 when only £12 was deducted?

JodieR

Sandy Dog wrote: »

Hello

My main concern is whether the P&L account should show the VAT Flat rate element or simply the Net Sales less VAT Flat Rate element.

You can show it either way in the accounts, both are acceptable. I've phoned HMRC about this before and that's what I was told.

Sandy Dog

Thanks for the extra tip as well.

Sandy Dog

Well spotted and no it wasn't a deliberate mistake, the £20 should as you say have been £12

Sandy Dog

If HMRC are happy then I'm happy. I think I prefer to take it off teh sales rather than as an expense.

groundy

Nice spot JodieR, left me feeling stupid on a monday morning:thumbup1:

stevo5678

Sandy Dog wrote: »

If HMRC are happy then I'm happy. I think I prefer to take it off teh sales rather than as an expense.

HMRC's preferred presentation is to net off with sales. I think showing as an expense is odd as it is a FR saving.

If we don't net it off with sales then we would show sales net of standard rate vat then the FR saving on a seperate line (as income as it is a saving).