Flat Rate Scheme VAT

Flat Rate Scheme VAT

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We have a client who trades in agriculture, and uses the VAT Flat Rate Scheme of 7.5%, as the guidelines show; turnover is £66,000 including VAT.

There is also rental and recharged telephone income of £11,000 including VAT. The client has opted to tax on this income

Should the £11,000 including VAT be declared on the 7.5% FRS basis, or through the normal 17.5%?
Chris McLaren

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By AnonymousUser
24th Aug 2005 10:48

The answer...
Insurance premiums charged by insurers are exempt from VAT. When a policy holder makes a claim under an insurance policy, the payment is treated as outside the scope of VAT - so it doesn't need to be included in the FRS calculation. Hope this has helped.

regards

Marc
www.chilternplc.com
[email protected]

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By cmclaren1978
23rd Aug 2005 14:19

Thanks
I did see that, just wondered if rental income is treated any differently, but I assume not.

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By AnonymousUser
23rd Aug 2005 12:56

It all goes into FRS
Its all in HMRC's notice on FRS:

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&propertyType=document&columns=1&id=HMCE_CL_000345#P256_25642

In short, you account for the secondary income at the rate for the main business activity.

regards

Marc

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By cmclaren1978
23rd Aug 2005 16:33

Insurance claims
Aside from the rental income, there is an insurance claim for damage to underground services. Would this be caught under the 'zero and exempt supplies' (i.e. included in Flat Rate turnover), or 'non-business income and any supplies outside the scope of VAT' (i.e. excluded from Flat Rate Turnover)?

I have always understood insurance to be zero-rated, but want to be sure on the exact treatment of the claim.

Many thanks in anticipation.

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