grocery/off licence VAT flat rate scheme

grocery/off licence VAT flat rate scheme

Didn't find your answer?

We have a new client start up who is approaching VAT threshold in next few weeks. The client runs a shop selling groceries and alcohol. This is our first shop client.

I wanted to ask whether the flat rate scheme 4% is popular with such clients? Or just complete standard returns? Groceries form more of sales than alcohol.

As this is our first such client which does not use an automated till in the shop, with this in mind is there an easy way to complete the VAT returns?

The shopkeeper will provide purchase invoices and details of weekly sales so it will be a manual process in order to calculate purchase and output VAT.

Any advice will be beneficial


Replies (2)

Please login or register to join the discussion.

Accountants Northampton
By Shamrock
13th May 2015 06:24

Work it out
Just get some anticipated turnover figures from the client and calculate the VAT liability under each scenario.

But if most of their sales are zero rated then they probably will be much better of using the standard VAT rules rather than flat rate.

Thanks (1)
paddle steamer
13th May 2015 10:06

Re ease of doing returns..

Re ease of doing returns, given no split of sales at point of sale using a scheme apportioning sales by ratio of zero/standard purchases, with annual adjustment, looks appropriate.

The key is obviously to  determine the most appropriate way to maintain books- I deal with a few retailers with standard/zero rated sales and tend to use an set of excel sheets which I  write and get them to complete . I check/correct/reconcille these each quarter.

With my clients creditors are not significant and accordingly maintaining records on an accruals basis (purchase ledger) and also needing to square the bank appears not to be justified vis a vis the cashflow advantage re the input vat claim versus the additional accounting costs to maintain a purchase ledger, accordingly I get them to in effect maintain a cashbook with vat/purchases analysed on the paid side and sales recorded daily.

Given small corner shops tend to make a fair number of cash purchases the takings/bank sheets have columns for cash paid out re expenses, re drawings, re taken by credit card/ visa etc and for banked direct. On the payment side there are two columns covering paid by cash, paid by cheque and then  each line is analysed by input vat, stan rate purch, zero rate purch, various expenses etc. There is a summary sheet to also keep a check on the cash control account on a monthly basis.

Once these sorts of daybooks are in place it is a simple task to link the excel sheets to summary sheets, a quarterly bank rec sheet  and a vat return working sheet   and then link the summary daybooks to an  ETB.  Once to this stage a few adjustments for creditors/stock/depreciation etc and the year end accounts pop out the mix.

Getting the client to correctly record the entries does take some time (depends on clients) but seeing them each quarter does allows you to give feedback re mistakes throughout the year rather than just at year end and clients do improve over time even if they have little understanding of debits/credits.

Also, just as a reminder, as registration is imminent do get client to do a stocktake on the appropriate date; doing a back calculated  deemed stocktake as at a date from a post event actual stocktake for vat purposes is not good fun!!! Also remember that if maintaining a cashbook with vat analysed on paid side then at registration it is not the paid date that counts but the underlying invoice dates of the sums paid re claiming input vat post registration/ not claiming pre registration.

Thanks (1)