A client with a guest house is on the VAT Flat Rate Scheme.
Is there any guidance on how this works with the 5% temporary reduction in VAT? Are there revised temporary Flat Rates % reductions published anywhere? If so, please could you post the link.
Thanks.
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Could be that new flat rates will be published.
I've not seen any announcement - but I haven't looked hard.
As an upodate I've just read the following here https://www.gov.uk/guidance/vat-reduced-rate-for-hospitality-holiday-acc...
The Flat Rate Scheme:
If you are a small business and use the use the Flat Rate Scheme to simplify your VAT calculations you should be aware that certain percentages have been reduced in line with the introduction of the temporary reduced rate of VAT.
More information can be found in VAT Flat Rate Scheme https://www.gov.uk/vat-flat-rate-scheme
However as of now the Flat Rate Scheme link percentages have not been updated so I presume an update will happen in the next day or so.
Have the reduced Flat Rate percentages been published yet please? I can't see any change on the HMRC Flat Rate calculation pages. Thanks.
Have the reduced Flat Rate percentages been published yet please? I can't see any change on the HMRC Flat Rate calculation pages. Thanks.
I'm guessing no, then.
Neil Warren has raised some of the problems in his quick analysis of the proposals as they stand: https://www.accountingweb.co.uk/tax/business-tax/vat-hospitality-rate-cu...
He speculated that many businesses might want to leave the scheme and adopt normal VAT accounting because of the 15% cut, but warned that once you leave the scheme, you must stay out for at least 12 months before you can rejoin.
I'm sure I read on gov.uk that there would be more guidance issued in the next week, but I can't find the link now. Good luck.
Neil Warren has raised some of the problems in his quick analysis of the proposals as they stand: https://www.accountingweb.co.uk/tax/business-tax/vat-hospitality-rate-cu...
He speculated that many businesses might want to leave the scheme and adopt normal VAT accounting because of the 15% cut, but warned that once you leave the scheme, you must stay out for at least 12 months before you can rejoin.
I'm sure I read on gov.uk that there would be more guidance issued in the next week, but I can't find the link now. Good luck.
I'd caution against precipitous action.
It will depend on
a. the new flat rate
b. the sales mix.
A pub which sells a few pork pies at lunch time will probably gain from the new flat rate. A proper restaurant with a bar - maybe not.
I don't know of any software that can automatically account for a change in FRS% mid quarter, let alone mid month.
Going to be a lot manual calculations to do if this is the case...
It's not that hard is it ?
Sales up to date of change x old rate.
Sales after date of change x new rate.
Jeez - if that's a problem, look for a new career.
I understand how to do the calculation thanks, no need to be rude.
Getting Quickbooks or Xero to correctly adjust for the change might not be so simple as they try to automate the whole process of filing VAT into a single button press.
I understand how to do the calculation thanks, no need to be rude.
Getting Quickbooks or Xero to correctly adjust for the change might not be so simple as they try to automate the whole process of filing VAT into a single button press.
As you clearly missed the point, you can very easily do the calculation manually.
FRS really dead easy
Those on proper VAT have the problem
Agreed.
Not many pubs with a reduced rate button on the till.
For the sake of six months, I wouldn't re-programme the till. I'd just work with the "departments" I already had. At the end of the day, you only need two figures. Standard rated sales, reduced rate sales.
Agreed
Booze and not booze
Never really been a need to distinguish before.
My family meals out always have a mix of the two, booze being a very small proportion.
To date pubs and restaurants only needed one category: Sales
For those that are interested here is Xero's response to my question about Flat Rate submission in the programme when being changed mid month:
"Here are the instructions to change flat rate percentages during a VAT period, for both types of return:
For the non-MTD VAT return:
Create a flat rate VAT return for your current VAT period setting.
In a new tab in your browser, go to your financial settings and change the VAT Period to a different setting. For example, if you normally file your VAT quarterly, change the period to monthly.
In the first tab, click Update. You'll now see From and To date fields.
Select the period when the old rate was used, then enter the old rate. Click Update.
Publish the return without filing with HMRC.
Export the VAT return in the format of your choice.
Create a new draft VAT return and follow the instructions above to see the From and To date fields.
Select the period from when the new rate began, then enter the new rate. Click Update.
Publish and export the second return.
Go back to your financial settings and change the VAT period back to your normal frequency.
Manually combine the two exported returns and file with HMRC outside Xero.
For the MTD VAT return:
Create two flat rate VAT returns for the VAT period, one using the old flat rate percentage and the other using the new flat rate percentage. Export both reports to Excel.
In Excel, use the Transaction by Tax Rate reports to create separate transaction summaries and totals for each period, ie to the date of the flat rate percentage change, and from the date of change. To do this:
Remove the transactions that don’t relate to the respective period.
Calculate the VAT amounts using the applicable flat rate percentage.
Add the flat rate VAT report amounts together.
In Xero, change your VAT scheme in financial settings to a non-flat rate scheme that matches your reporting basis, eg accrual. This is so you can update the VAT return amounts using VAT box adjustments
Enter VAT box adjustments to adjust the VAT return amounts to equal those you’ve calculated. Use posting adjustments to update Xero.
Submit the VAT return.
Reset your flat rate scheme in financial settings.
If you need further help, we recommend you contact HMRC."
My client is on Xero also and is a small cafe on FRS VAT.
I understand what needs to happen and am happy to claculate manually but I am not sure how to get the VAT return to show the correct figures as the FRS adjustment is not something I would normally need to adjust.