When filling in the income section of the self assessment while under the flat rate vat scheme should the final value be with vat or without?
So if the turnover was £20,000 with 17.5% vat for example on top you have invoiced a total of £23,500 would you enter £20,000 or £23,500 on the SA income return?
Or something else depending on what Flat Rate Scheme percentage rate is applied.
Thanks in advance.
Simon
Replies (8)
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Flat rate turnover
Enter the gross.
The VAT actually payable to HMRC is shown as an "other expense".
Whilst JRs reply will give the same profit figure...
This is what HMRC state in their blurb:
7.8 How do I prepare business accounts for income tax purposes while I am using the flat rate scheme?
It is expected that accounts for businesses who are using the scheme will be prepared using gross receipts, less the flat rate VAT percentage, for turnover and that expenses will include the irrecoverable input VAT.
For both VAT and income tax purposes, there is a requirement to keep a record of sales and purchases. But, for businesses using the scheme, that record does not have to analyse gross, VAT and net separately. The records need only be complete, orderly and easy to follow.
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.por...
So my answer is "something else".
Flat rate
My reply was based on the Revenue guidance in SEF6 which states
"If you
decide to record your figures:
• excluding VAT, include
– in box 15 any balance on your VAT account that is not to be paid over
to us (this is the amount of VAT on your income that exceeds the VAT
paid on your expenses, plus the payment under the Flat Rate Scheme)
– in box 29 any balance on your VAT account that you cannot recover
from us
• including VAT, include the net payment to us under the Flat Rate Scheme
as an expense in box 29."
Yes.
Simon. Yes that is correct.
John - maybe HMRC are offering contradicting advice. I had certainly read what taxhound had said. At the end of the days both ways result in the same result so I wouldn't criticise either.
VAT and income
Sage are no help with this.
A client has used sage online but it auto clears the VAT accounts on flat rate as follows:-
Bal of VAT Purchases (DR)
Bal of VAT Sales (CR)
and posts corresponding entries to VAT Liability
However, as they are on a flat rate it then clears the difference as shown on the VAT return but not sure where to! so much for it being double entry.
IE it auto posts the following:-
DR VAT Purchases CR to VAT Liability
DR VAT liability DR VAT Sales
plus a DR or CR depending if its DUE OR A REFUND on Vat liability
but no clue as to the otherside posting.
Thus making the VAT liability correct to what is due/reclaimed but won't show the total to be declared as extra profit/loss.