CT600: Trade profit of a VAT registered company

As a VAT registered LTD company, do I fill my profits/expenses including VAT or without VAT?

Didn't find your answer?

Perhaps a very basic question, but can't find an answer anywhere. Having a LTD company registered for VAT. VAT is settled using flat rate scheme. Do I fill my CT600 trading profits and expenses including VAT or excluding VAT?

Response:

It does not really matter as long as the apropriate adjustments are made to consider the Flatrate VAT Scheme surplus in the calculation as this is not considered as an excluded income.

Example:

Income: 100 GBP + 20% VAT = 120 GBP. Paid to HMRC on VAT 19.8 (16.5%).

Expense: 40 GBP + 20% VAT = 48 GBP. I choose not to reclaim VAT by opting in for the flat rate scheme.

What do I fill into CT600 as Turnover and Trade profits, expenses?

Response:

Either [ 100 GBP + ( 20 GBP - 19.80 GBP) ] - 48 GBP => 52.20 GBP.

or 100 GBP - [ 48 GBP - ( 20 GBP - 19.80 GBP) ] => 52.20 GBP.

Credit: DJKL (for more details see the full response below)

Replies (51)

Comments for this post are now closed.

the sea otter
By memyself-eye
27th Dec 2017 11:02

There is an answer - your accountant will tell you
I'm guessing based on the fact you have no clue what to do that you don't employ one?

Maybe now is a good moment to do so.

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Replying to memyself-eye:
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By Karol.Ko
27th Dec 2017 12:15

You made such an effort to write an answer yet you are bullying me rather than answering my question instead. What a waste!

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Replying to Karol.Ko:
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By legerman
27th Dec 2017 13:15

Karol.Ko wrote:

You made such an effort to write an answer yet you are bullying me rather than answering my question instead. What a waste!

Bullying? The answer given was correct, you need an accountant. Not knowing the answer to this question means you don't have sufficient knowledge to file a correct set of accounts, and that could come back to bite you at a later date.

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Replying to legerman:
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By Karol.Ko
27th Dec 2017 18:12

Perhaps you gave me the correct answer. Yet I did not ask whether I need an accountant or not.

I asked the folks around here something what would help me to understand a couple of things. That's it. Not more and not less.

You are simply assuming something what's by far not true.

Maybe I did not provide sufficient information to answer my question. If so, how about to tell me what's missing?

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Replying to Karol.Ko:
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By legerman
28th Dec 2017 10:39

Karol.Ko wrote:

Maybe I did not provide sufficient information to answer my question. If so, how about to tell me what's missing?

Your question was understood, but as you demonstrated further down the thread, not understanding the principles regarding Ltd Company accounts and filing a CT600 could mean a costly investigation for you later on.

You may not have liked the answer, but it was the correct one.

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By andy.partridge
27th Dec 2017 12:07

Not sure why you are asking. It's clear you aren't particularly interested in getting things right so don't let this arcane technicality prevent you from filing.

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Replying to andy.partridge:
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By Karol.Ko
27th Dec 2017 12:17

I am asking because I am interested to do things right.
Another useless answer to my question though. If you don't want to answer my question, then just don't and move on with your life.

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Replying to Karol.Ko:
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By andy.partridge
27th Dec 2017 12:46

But I DO want to answer your question. The problem I have is that you are so undeserving I will save my charity for someone else.

Perhaps you would be able to move on with your life if you had an accountant.

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Replying to andy.partridge:
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By Karol.Ko
27th Dec 2017 18:23

I came here to ask professionals a hopefully simple question. That's it. I did not come here to fight with anybody.

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By Martin B
27th Dec 2017 12:48

Turnover is £12,526
Expenses are £45,275
Profit is £112,256
and corporation tax to pay at 20% subject to capital allowances.

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Replying to Martin B:
RLI
By lionofludesch
27th Dec 2017 13:23

What about creditors, debtors, stock, depreciation ?

Etc etc.

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Replying to lionofludesch:
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By Karol.Ko
27th Dec 2017 19:02

In my particular case, all settled to zero or zero. (no stock, nothing that can "depreciate").

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Replying to Karol.Ko:
RLI
By lionofludesch
28th Dec 2017 09:41

Karol.Ko wrote:

In my particular case, all settled to zero or zero. (no stock, nothing that can "depreciate").

Surely there'll at least be your accountant's fees.

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Replying to lionofludesch:
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By Karol.Ko
28th Dec 2017 09:50

Yes. 40 GBP + VAT. See my example.

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Replying to Martin B:
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By Karol.Ko
27th Dec 2017 18:42

Martin B wrote:

Turnover is £12,526
Expenses are £45,275
Profit is £112,256
and corporation tax to pay at 20% subject to capital allowances.

Thank you for your response. Could you please elaborate for my benefit and for the benefit of others how you achieved these results?

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RLI
By lionofludesch
27th Dec 2017 14:09

Why do DIY accountants take the huff when the obvious is pointed out to them ?

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By Tim Vane
27th Dec 2017 13:44

If your company is developing LTD technology then it is probably eligible for R&D relief and I would concur with the above posts that you should probably speak to a specialist as it could make a big difference to your company's tax bill.

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Replying to Tim Vane:
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By Karol.Ko
27th Dec 2017 18:20

Thank you, I take you point. However at this moment I am just trying to assess the maximum "damage".

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RLI
By lionofludesch
27th Dec 2017 13:51

Are you preparing FRS 102 or FRS 105 accounts ?

Actually - are you preparing accounts at all or are you just filling in the CT600 ?

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Replying to lionofludesch:
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By Karol.Ko
27th Dec 2017 18:47

For the time being I am just trying to understand the principle and assess the maximum "damage".

Can't answer your question about FRS (102 or 105), sorry. I am not sure at this point.

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By Trethi Teg
27th Dec 2017 15:26

Based on the reaction of Karol.Ko i.e. the immediate accusations of "bullying" and telling someone to "move on" I wouldn't take this person on as a client. I have over the years developed an instinct for trouble and that instinct is in overdrive here.

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Replying to Trethi Teg:
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By Karol.Ko
27th Dec 2017 18:19

And how exactly you justify to yourself that the response I received to my question was appropriate?

There are people who simply answered my question and I would like to THANK them, and there are other people who did not contribute anything even remotely valuable to this thread. So my point is, what is driving them, and yourself to contribute?

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Replying to Karol.Ko:
By johngroganjga
27th Dec 2017 18:42

If you have to ask this question your company can’t have prepared its accounts yet, so you are nowhere near ready to sort out its tax return. Forget the CT600 and concentrate on getting your accounts sorted. If you don’t know how to prepare a company’s accounts ask an accountant to do it for you. That is what they are for. It’s like extracting painful teeth. You can do it yourself if you want, but dentists are there to make it safer and less painful.

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Replying to johngroganjga:
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By Karol.Ko
27th Dec 2017 18:57

You are right. I am not here to get you to fill the CT600 for me, neither to do my accounts. My accounts will be (obviously) done by an accountant. But I am not there yet either.

I came here to ask, if those two examples where my actual figures, what would I fill into the CT600.

If the question I asked can't be answered, I would have accepted that answer and gone away.

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Replying to Karol.Ko:
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By andy.partridge
27th Dec 2017 20:47

Karol.Ko wrote:

My accounts will be (obviously) done by an accountant.

Oh yeah, obviously ;)

Unfortunately you are at least a year late in appointing one by the sound of it. A good cost saver for you . . . obviously.

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Replying to andy.partridge:
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By Karol.Ko
27th Dec 2017 22:41

Luckily for me, you are wrong. :-P

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Replying to Karol.Ko:
By johngroganjga
27th Dec 2017 21:29

The figures you put on the CT600 (if it is being completed by you instead of your accountant - which, by the way, is a very strange way of going about it) come from the accounts. You seem to want to do things backwards. Accounts first - then tax return, is a universal truth.

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Replying to johngroganjga:
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By andy.partridge
27th Dec 2017 21:58

The OP seems to have realised they are not equipped to prepare the accounts, but believes the tax side of things is a walk in the park and not worth investing in professional help.

Maybe tomorrow they will say that they were never intending to look after the tax comp and return themselves . . . obviously.

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Replying to johngroganjga:
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By Karol.Ko
27th Dec 2017 22:47

I have given you the accounts. There is just two of them in my example. Not sure why you are looking for more. There is a maximal amount of tax that I will pay based on this example and I am looking for that figure. Nothing more, nothing less. No tricks, no optimization, no tax evasion, just a plane simple example. Perhaps its not real world example, but why would you care?

Is it possible to answer the question based on and using the Example figures provided or not? - That's the only question here.

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Replying to Karol.Ko:
By johngroganjga
27th Dec 2017 22:54

How many times??

Your question is:

“What do I fill into CT600 as Turnover and Trade profits, expenses?”

The answer is that the figures will come from your company’s accounts when the accountant you say you will ask to prepare them has done so.

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Replying to johngroganjga:
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By Karol.Ko
27th Dec 2017 23:09

My question is purely related to the example I made.

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Replying to Karol.Ko:
RLI
By lionofludesch
28th Dec 2017 09:32

For the avoidance of doubt, you can't start the CT600 until you have drafted the accounts.

And you can't finish the accounts until you have done the CT600.

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Replying to lionofludesch:
By Ruddles
28th Dec 2017 11:49

lionofludesch wrote:

And you can't finish the accounts until you have done the CT600.

That is just plane (sic) wrong

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paddle steamer
By DJKL
28th Dec 2017 01:40

You have a choice:

Either sales 120-19.8=100.2

or sales 100

if the first, sales 100.2 costs 48, profit 52.2

if second, sales 100 costs 47.8 (48-0.2) profit 52.2

You then compute tax.

I would do second as do not like the sales shown as greater than invoiced, however if say retail (which I suspect it is not, as no stock) I might consider former

However none of this really helps as you need to attach your accounts to the CT600, so you need the accounts.

However you must also surely have some creditors as vat at year end is surely a creditor as is corporation tax.

But as already advised by others, do your debits and credits, calculate profit before tax, then calculate tax on said profit, finish trial balance incorporating that tax charge and liability, prepare accounts from said trial balance, prepare CT600 from said accounts.

But, I also would suggest (as have others) that you ask an accountant to review/correct records,to extract TB from them and calculate accounts and CT600; with the correct software it is quick, simple and cheap for an accountant to do this, it also ought to prompt him/her to ask questions which may, by your answering them,allow him/her to adjust your records for items of expenditure you have omitted as you have not thought about /considered them.

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Replying to DJKL:
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By Karol.Ko
28th Dec 2017 12:31

Thank you very much. You have provided me with the answer I came here for.

I was interested to know how to treat the "little bit" of VAT left over from the settlement with HMRC using flat rate scheme.
I am asking this because I have no experience with Flat rate scheme.

Thank you once again, really appreciated.

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Replying to DJKL:
RLI
By lionofludesch
31st Dec 2017 18:44

DJKL wrote:

You have a choice:

Either sales 120-19.8=100.2

or sales 100

I disagree with this. Turnover is immutable under both FRS 102 and FRS 105.

Which makes sense when you reckon turnover is a factor in deciding whether you can use FRS 105.

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Replying to lionofludesch:
paddle steamer
By DJKL
31st Dec 2017 19:45

If a retailer?

I accept sales as the net invoiced when the net is invoiced, and any gain /loss using flat rate taken to another accounts head, but where a retailer taking monies gross I would be very unlikely to calculate what they ought to have paid if say using a retail scheme, adjusted that from gross to get net sales for the accounts and then post any difference to the sum actually paid under flat rate somewhere else.

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Replying to DJKL:
RLI
By lionofludesch
02nd Jan 2018 15:22

The fact is that most retailers eligible for the FRS will have one rate of tax. The corner shop grocer has disappeared, leaving only the newsagent and tobacconist as a likely candidate. And with the price of ffags these days, coupled with the low profit margin, any business below the FRS turnover threshold would be likely to go out of business.

Nevertheless, I take your point - different VAT retail schemes will, more than likely, lead to different output tax liabilities, so there's no "right answer".

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By Trethi Teg
28th Dec 2017 08:30

I think my instinct was right. Lots of grateful clients out there. No need for this sort.

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Replying to Trethi Teg:
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By Karol.Ko
28th Dec 2017 10:06

I can say the same. There is a lot of good accountants who can answer a question.

And there are others (my instinct says like yourself). Mouthful, but no meaning, nor content. You ask them a question and they answer for the sake of answering. Not to tell you what you are asking.

Perhaps they feel threatened?

I got the answer I came here for - Thank you DJKL - and the rest of your advices, did you seriously think I needed to be advised, that I need an accountant or that I should make my accounts first?

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Replying to Karol.Ko:
Stepurhan
By stepurhan
28th Dec 2017 10:50

Karol.Ko wrote:

I can say the same. There is a lot of good accountants who can answer a question.


There are. They expect to get paid for their expertise.

No-one feels threatened by you. Some people tried to prevent you from getting into a lot of trouble because you clearly don't know what you are doing (Don't bother telling us you do understand again. That is no more plausible than your claim to be a business analyst.)

You sir are an abusive free-loading leech and a prime example of why this site should be restricted to professionals only. Since you seem determined to go without a professional (As others have pointed out, your claim of having an accountant to prepare the accounts is not remotely plausible) then I sincerely hope HMRC take you and your business apart.

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Replying to stepurhan:
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By Karol.Ko
28th Dec 2017 12:39

Right. I don't know what I am doing. At least you seem to know what I am doing.

You are completely wrong in everything you said. Just another person assuming something where he cant possibly know the truth and responding based on his assumptions.
Look at this discussions. 37 USELESS comments with NO value what so ever. The only comment that has value is the response to my question.

Like I said elsewhere, what drives you to contribute when you have nothing to say?

Of course I am not happy and this reflects in my "language". However I did not start the fight. Just defending my position against people who are abusing this forum to ventilate their ego.

Once again, thank you to those to helped me and answered or at least tried to answer my question without assuming. Everybody else who felt like replying and assuming... you know what.

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the sea otter
By memyself-eye
28th Dec 2017 12:48

Hello numpty - bully here...ventilating (?) my ego.
That's £150 please.

A cheque will be fine.

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Replying to memyself-eye:
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By Karol.Ko
28th Dec 2017 13:09

On its way.

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Brunel
By Brunel
29th Dec 2017 18:13

This is a site for Accountants.
You are not an Accountant.
Go away.

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By carnmores
31st Dec 2017 18:37

its no wonder people dont want to go to accountants when they get treated this way online.

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Replying to carnmores:
By Ruddles
31st Dec 2017 19:02

You mean because they can get (or think they can get) the advice they need for nothing online?

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By carnmores
31st Dec 2017 18:39

its no wonder people dont want to go to accountants when they get treated this way online. try and be a bit nicer .

Happy New Year everybody (non accountants included)

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Replying to carnmores:
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By andy.partridge
31st Dec 2017 19:19

Not sure who these people are that 'don't want to go to accountants'. On here I only see people who feel they have no need of accountants or people who know they have a need but don't want to pay.

Both sets deserve the banter. As often as not they give as good as they get so let's not get too precious about their feelings or ours.

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Replying to andy.partridge:
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By carnmores
02nd Jan 2018 15:12

Hi Andy Karol certainly is! But my comment holds good. Too many accountants are charging far too much. I have just taken over a client who had been disengaged by a well known firm, frankly their MO was ridiculous and they wanted £375 (on top of the accounts fee) to submit an annual return and change the shareholdings, which would have taken about 10 minutes.

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