Flat Rate VAT and EU sales (Non VAT)

Flat Rate VAT and EU sales (Non VAT)

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Hi All,

If you are on a flat rate scheme and there is also income from EU on which there is no output VAT charged, do you still have to declare this on the VAT return?

Replies (6)

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chips_at_mattersey
By Les Howard
10th Mar 2014 13:43

It depends!

Supplies of services which are deemed to be outside the UK are outside the FRS.

Sales of goods are to be included in the turnover for FRS purposes. If the proportion of such sales is high, then it might prove better to leave the FRS, and use conventional accounting for VAT.

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By shaun king
10th Mar 2014 17:22

@Les - are you sure?

why are services excluded but goods aren't. Surely they both go into FRS turnover calculation

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By mbdx7ja2
10th Mar 2014 17:31

Place of supply for goods is in the UK even if dispatched - zero rated supply

Place of supply for services is in the EU - outside the scope of UK VAT.

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By khalm0
11th Mar 2014 09:28

In this case, it is the supply of old clothes. The main customer is UK based thus the VAT registration. Flat rate became a more convenient way as there was little or no input VAT to reclaim. Now there will be 2 key customers, One still UK based so flat rate is still ok, but now also one in a EU country where no Output VAT is being charged. So if this sale gets added to the total sales and the flat rate applied, then they will pay output vat on a sale which did not include VAT in the first place which does not sound right to me!

 

Am I being stupid here?

 

I thought that maybe the original calculation for the UK sales will remain as normal and the flat rate is applied to the sales that include VAT. Then we disclose the EU sale in the EU sales?

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By andrew1211
17th Mar 2014 15:59

You are correct in the scenario you describe, flat rate VAT would be due on all sales including those that did not have VAT charged on them to start with. It is one of the disadvantages of the FRS and is clearly unfair. You would need to go for a full VAT registration if there is a big monetary disadvantage.

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RLI
By lionofludesch
17th Mar 2014 17:31

FRS

It's not unfair - the FRS is a concession.  You don't have to be in it.

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