VAT flat rate scheme

System
System Posts: 100,534 🤖 Admin 🤖
edited 12:08PM in AAT member discussion
It has been "suggested" to one of my clients that they might be better off on the FRS. HMRC have told me that their percentage would be 11%.

In order to prove the bloke down the pub wrong :lol: am I right in doing the following calculations:

Gross sales £117.50

x 11% = £12.92 payable

If I am right then they would be about £150 per quarter worse off under FRS :wink:

Please, someone tell me I am correct!

Claudia

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT flat rate scheme

    Whoops - hit the wrong button :oops:

    Claudia

    PS - is there a delete button for situations like this?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT flat rate scheme

    You are right Claudia - it is the gross sales multiplied by the flat rate %.

    Go prove that bloke down the pub wrong :lol:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT flat rate scheme

    Thanks for that.

    I have yet to find a client who would be better off under the FRS (myself included) - the only advantage is no investigation, which may in itself be cost effective :wink:

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT flat rate scheme

    I only know of one person who uses the flat rate scheme (a mechanic). He is actually better off by a couple of hundred pounds a quarter :D

    This guy must be a one off as I don't no many clients who would benefit financially from the FRS.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT flat rate scheme

    I have a client that is better off on flat rate scheme...It can be done!!!! :lol: He's a contractor who's expenses are covered by the contract and therefore very little by way of expenses go through his accounts, just lots of sales invoices!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT flat rate scheme

    Me too..

    I have a number of clients who are consultants of one kind or another. Most have little in the way of VAT to reclaim (travel, petrol etc.) so it can often be beneficial for them.

    I have put a few other clients on the scheme simply because they have enough problems with book-keeping as it is without having to deal with VAT as well!


    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT flat rate scheme

    It's certainly easier for clients to understand!!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT flat rate scheme

    I also have a couple of clients who are better off - not by much though.
    One is a consultnat who doesn't have many expenses / purchases and the other is a guy who has a suit hire business and only has major purchases once every couple of years when renewing stock.

    I don't know about it being easier for clients to understand, mine don't seem to although it could be a case of not wanting to understand.

    Michelle
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT flat rate scheme

    Probably not easier to understand..

    ..but certainly easier for clients who do their own book-keeping.



  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT flat rate scheme

    Agreed :lol:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT flat rate scheme

    I have a client who uses the scheme and is better off. It usually works for those with low expenses. However, they must remember that whatever they save is counted as extra profit at the end of the year!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT flat rate scheme

    What happens to the entries/structure of the Vat 'T' account? Client was previously accounting for Vat traditionally, paying every 3 months?

    Thanks.

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