Flat Rate VAT Scheme

Options
BIG WAL
BIG WAL Registered Posts: 133 Dedicated contributor 🦉
in General accounting discussion
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.

Comments

  • AK002
    AK002 Registered Posts: 2,492 Beyond epic contributor 🧙‍♂️
    Options
    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
    BIG WAL Registered Posts: 133 Dedicated contributor 🦉
    Options
    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
    AK002 Registered Posts: 2,492 Beyond epic contributor 🧙‍♂️
    Options
    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
    groundy Registered Posts: 495 Dedicated contributor 🦉
    Options
    Purchases on sage should be posted using T0, that way the inputs are correct on the VAT return but no VAT is reclaimed.
  • sheelagh
    sheelagh Registered Posts: 133 Dedicated contributor 🦉
    Options
    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
    groundy Registered Posts: 495 Dedicated contributor 🦉
    Options
    Sheelagh is right my mistake sorry
  • jilt
    jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
    Options
    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%

Categories

Privacy Policy