Flat rate VAT- other income calculation

Flat rate VAT- other income calculation

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Hi

New client who is a sole trader  on flat rate vat scheme so I understand that other income will be included in the turnover for vat.

He is an publisher and an actor. He receives residual fees approx. £50 every year.

Am I correct in thinking the residual fees are not  the same thing as royalties  (and so private income which does not have to be included in turnover) and needs to be included in the turnover for flat rate scheme.

If yes, is the correct treatment,

a) Consider the acting residual fees as received net of vat

b) and so grossing them up at  the rate of 20%

c) then deducting the flat rate vat from the gross figure.

Also, would you show the publishing  fee and acting fees together on one  profit and loss account as acting fees are so small or on separate P&L? Historically previous accountant has shown them together in income and expenditure account as opposed to p&l

Thanks

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By emanresu
28th Nov 2014 15:26

I have a very similar client

She has notified all her fees/royalties payers of her VAT-registered status - and the payers add VAT.  The fees/royalties are then just part of her turnover, processed through FRS along with the rest.

 

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By neileg
28th Nov 2014 15:39

Residual fees

These are fees recieved from repeats so are income arising from acting and should be included in turnover. There is no reason why these should not be grossed up by the payer under the same self billing arrangements as royalties. These aren't 'private income' whatever thatn means.

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By Arabita
29th Nov 2014 21:20

Thank you

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