1% discount VAT Flat Rate Scheme

1% discount VAT Flat Rate Scheme

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A client is registered for VAT under the VAT Flat Rate Scheme on the cash based method.

He was VAT registered on 25/09/14, so the 1% discount to his flat rate percentage would apply for 12 months from this date, so to 24/09/15.

However, is the 1% discount applied to the invoice date or date the invoice is paid as he is using the cash based method?

e.g. Invoice dated 01/09/15, but not paid until 31/10/15. Would this invoice receive the 1% discount.

I have reviewed VAT notice 733, but found it a bit unclear with regards to the 1% discount.

Many thanks

Replies (3)

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By Howard Marks
16th Nov 2015 15:04

Dates

The software I use certainly picks up the invoice date in that scenario.

 

Funny, i'd have thought it would've been the date of payment but perhaps not.

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By Jules1234
16th Nov 2015 15:14

I know, I would have initially assumed date of payment also, but did wonder as had no official guidance to support this. Many thanks, that is very helpful! 

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By Portia Nina Levin
16th Nov 2015 15:45

Having looked at both the VAT Notice and the legislation, I think that Howard's software is doing it wrong.

The legislation just says to apply your FRP to your relevant turnover to calculate the output tax due from you, and that the FRP is discounted by 1% for the first year (implicitly of being applied to your relevant turnover).

Relevant turnover is then tax point based or cash based (ignoring the way the scheme can apply to retailers).

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