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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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.
@Les - are you sure?
why are services excluded but goods aren't. Surely they both go into FRS turnover calculation
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.
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.