Calculating VAT on weekly / monthly / 1/4ly takings?

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steve2008
steve2008 Registered Posts: 89 Epic contributor 🐘
in Chat and off-topic discussion
Sorry if there is a better forum for this question, I'm studying lvl 2 at the moment but this question doesn't relate to those topics.

The business I work for currently (a takeaway) is registered for flat rate VAT (11.5% at the moment).
Our accountant calculated the VAT return based on the full takings for the whole quarter, whereas I calculated it on a weekly basis, inevitably there was a small difference (2 pence).

This lead me to question what is acceptable practice in this regard.
If it was calculated on the daily figures it would have been around 30p less than the accountant calculated, I can only imagine how much less it would be if the VAT was calculated on each customer.

Are all those methods acceptable?

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  • Makkusu
    Makkusu Registered Posts: 94 Regular contributor ⭐
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    Since it's a quarterly return I would calculate it on a quarterly basis.

    Take the VAT-inclusive (gross) turnover for the quarter, multiply it by 0.115 and viola your Box 1 figure. Flat rate is an easy return I wouldn't complicate it any more. :)

    Accountancy software would do the same.
  • steve2008
    steve2008 Registered Posts: 89 Epic contributor 🐘
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    Thanks.
    I was just wondering about the potential of saving money. Seems odd that we calculate it in such a way that the tax man gets the most possible.
  • Makkusu
    Makkusu Registered Posts: 94 Regular contributor ⭐
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    HMRC requirements and all, they want you to calculate the VAT returns as a category specified percentage of your turnover for the given VAT return quarter. So, I'm guessing it would flag up on HMRC's system that you aren't calculating it based on the quarterly total, thus submitting illegitimate amounts.

    There are VAT schemes that have different methods of calculation but the requirements are stricter I think. Not sure what type of flat rate your company are on (sounds like cash based?), but take a look at HMRC for more ideas:

    http://www.hmrc.gov.uk/vat/managing/returns-accounts/flat-rate-returns.htm
    http://www.hmrc.gov.uk/vat/start/schemes/retail.htm

    I must say their website is an invaluable wealth of information!
  • AlanAddison
    AlanAddison Registered Posts: 2 New contributor 🐸
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    Since it's a quarterly return I would calculate it on a quarterly basis.

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