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
Replies (4)
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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
It all goes into FRS
Its all in HMRC's notice on FRS:
In short, you account for the secondary income at the rate for the main business activity.
regards
Marc