When a client submits VAT returns under the Flat Rate Scheme is the extra income received from VAT teated as taxable income?
I had always assumed that Income was the Gross Income less VAT paid and that the total cost including VAT was allowed as a cost.
Something in a discusiion with another accountant led me to doubt my own view.
Can anyone confirm whether my opinion was correct and if not where I was going wrong
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Replies (3)
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Yes
I'm with you.
There has been debate in the past on here on the exact method of accounting for the FRS but they all come out with the same taxable profit. I do it the same way as you do.
Yes
I'm on the flate rate scheme and was told by my accountant that any cash we make out of the it is taxed as normal operating profit.