Hello,
I have a client on the flat rate scheme cash basis who was on 14.5%. An invoice was raised before the change of percentage to 16.5% but the payment for the invoice was made after the change. Should the payment be calculed at 14.5 or 16.5%?
Thank you!
Replies (5)
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The tax point will determine which % is used (assuming the services were provided in full by 31st March 17), from what you've put the tax point will be while he was at 14.5% so this is what it should be calculated on.
Surely that only applies if you are using the invoice method of calculating VAT?
As many traders use the cash basis, then the VAT would be charged at 16.5% as received after 31st March.
Actually, I believe that the rate of VAT is determined by the tax point. The application of the cash basis, simply determines what VAT return it is reported on, if at all.
See 9.2 of the VAT notice 733:
https://www.gov.uk/government/publications/vat-notice-733-flat-rate-sche...
Below the link says "If you use the VAT Cash Accounting Scheme, the tax point is always the date the payment is received."
Is this correct?
https://www.gov.uk/vat-record-keeping/time-of-supply-or-tax-point