Registering an alloy wheel repair Limited company for FRS VAT and the sic code most suitable appears to be 45200 - 009 - Motor vehicle painting and body repairing.
This comes up with FRS rate of 8.5%, (further reduced to 7.5% for the first year)
Am I crazy to feel really uneasy about using this rate? His expenses are minimal, really just a few materials and his fuel costs so the benefit is huge as all his customers are vat registered businesses.
I don't mind clients profiting from the FRS but when it is such a discrepancy to what standard vat would throw up it worries me a bit?
Any thoughts or reassuring "just do it!" would be greatly appreciated.
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Replies (9)
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From what I understand of the FRS Scheme, it is the taxpayer who chooses the most appropriate flat rate category. As long you keep notes of why a particular category has been chosen, and those reasons are reasonable, then HMRC cannot retrospectivley alter the rate.
I see what you mean
I take it that the alloy wheels aren't painted and aren't part of the body being repaired ?
To be honest, given that the FRS rates are limited in number, I'd probably run with it but I don't blame you for being toey.
Thanks
I take it that the alloy wheels aren't painted and aren't part of the body being repaired ?
To be honest, given that the FRS rates are limited in number, I'd probably run with it but I don't blame you for being toey.
Yeah I wouldn't personally say alloys are bodywork but guess they are cosmetic repairs the same as bodywork.
Rang HMRC who were useless and simply said pick the motor category. This may well be right but dont fancy sitting in a vat inspection years down the line arguing the 8.5% against their 14.5% !!
If you are unsure why not go for the 12% "Any other activity that is not listed elsewhere" - reduced to 11% in the first year of VAT registration (not the first year of being in the FRS just in case you were going to fall for that trap).
Disservice to client?
If you are unsure why not go for the 12% "Any other activity that is not listed elsewhere" - reduced to 11% in the first year of VAT registration (not the first year of being in the FRS just in case you were going to fall for that trap).
Possible disservice to client doing that? At £40k net sales 8.5% is saving of £3920 pa, 12% would be £2240 so diff of £1680 per year
Am I the only one who is.....
.....confused by reference to 14.5% rate, I do not see how they could ever be in this, motor vehicle repairs seems correct to me, and I would go to the tribunal to stay in it as well, if they do come knocking.
Regards
MtF
Sorry, sarcasm!
.....confused by reference to 14.5% rate, I do not see how they could ever be in this, motor vehicle repairs seems correct to me, and I would go to the tribunal to stay in it as well, if they do come knocking.
Regards
MtF
Sorry it was sarcasm (doesn't work well in text!) point was didn't want to end up with a large vat bill for client if a higher rate was decided by HMRC
VAT advice.org blog
There was a blog from VAT advice.org recently on a similar subject. Despite what HMRC have claimed regarding not retrospectively disagreeing % choices so long as it was "reasonable" they are in fact attempting to do just that.
I can't really see any argument from HMRC that the 8.5% would be an unreasonable choice here other than sour grapes.