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VERY TRUE
ITS SURPRISING HOW MANY ACCOUNTANTS AND CLIENTS
DONT understand how the flat rate of vat is applied to SALES + standard rate VAT(i.e. gross).
the client has to charge customers standard rate vat and AFTER/WHEN the quarter ends apply the flat rate to gross sales.
fixed rate %age compliance
make sure once you have registered for FR vat you ensure the FR section of the variations team in HMRC have logged it.
Its surprising how often the trade description is not correctly recorded at the HMRC end:
Our clients' FR registration was logged as "miscellaneous" on the vat system. He had a FR back tax assessment(we accounted for FR vat using the right rate for his trade but because the vat registration document did not correctly describe the trade the surcharge was raised)- the miscellaneous fr is higher than motor haulage/courier rate(for obvious reasons because of the high duties on fuel).
Surely this is academic?
If your business is big enough to be vat registered, then you should a LTD anyway and any rental income in your and your wifes joint names to mitigate CGT....basic stuff chaps....
VAT threshold not so big
VAT applies to businesses with turnover under £100,000. If you have a business with high costs of sale, you can easily need to register for VAT without having the size of business which warrants incorporation. Of course, you might not want to use a flat rate for one of these businesses.