VAT - Channel Islands - Flat Rate Scheme

VAT - Channel Islands - Flat Rate Scheme

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Company is registered on the Flat Rate VAT scheme. It makes a supply (of recruitment services) to a company in Guernsey.

According to the HMRC helpline, this supply is "outside the scope of VAT". But the helpine also advises that the supply should be included in Flat Rate Turnover calculation (so although there is no VAT on the supply, HMRC get x% of it!)

Section 7.3 of VAT notice 733, "What income do I exclude from my flat rate turnover?":

"You exclude from your flat rate turnover:

non-business income and any supplies outside the scope of VAT"

My conclusion is that I don't include VAT on the sales invoice and I exclude it from the calculation of flat rate turnover. Is this correct?

Thanks

stephen smith

Replies (2)

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By stephen.smith.ramesys
15th May 2006 12:18

Finally got a satisfactory answer
Called the hmrc helpline again and another "offcial" told me I had to include the supply in Flat Rate turnover but the logic didn't add up, so she consulted a supervisor and confirmed I was right and should exclude it! This would have cost me £1,700.

Can't help thinking that this helpline must churn out a lot of wrong advice and you need to know what you are talking about to get the right answer.

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By AnonymousUser
09th May 2006 13:42

Half an answer...
You don't include VAT on your invoice (we had a similar question last month which took a fair amount of research to answer) - afraid I don't know about the flat rate scheme, but from what you have said I'd agree you exclude it.

Fraser

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