HMRC Annual Accounting VAT Mistake?

HMRC made a VAT mistake?

Didn't find your answer?

I applied to both the flat rate scheme as well as the annual accounting VAT scheme at the same time.

My estimated turnover was 110k, this was to be used for the annual accounting interim VAT monthly payments.

The flat rate for my industry is 7.5%, with my first year discount it is 6.5%
 

However, I received my VAT registration letter, but this letter has me paying monthly interim payments of £2200 which from my estimated turnover, is a standard rate 20% interim payment rather than the expected 6.5% liability

if my calculations are correct, I should be paying £500-600 monthly interim payments not £2200, this seems ridiculous and unreasonable, it will kill my cashflow and it isn't even correct with the rate I'm on

Am I missing something? I'd appreciate any help!

Replies (21)

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By David Ex
26th May 2024 11:25

nenn wrote:
Am I missing something

You’re probably missing quite a lot if you have been running a £110,000pa business with no professional advice. Time to rectify that now.

Thanks (4)
Replying to David Ex:
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By nenn
26th May 2024 11:28

Thank you for your absolutely useless input David

I am quite clued up, but there’s no guidebook for HMRC’s incompetence is there David?

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Replying to nenn:
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By David Ex
26th May 2024 11:50

nenn wrote:

Thank you for your absolutely useless input David

I am quite clued up, but there’s no guidebook for HMRC’s incompetence is there David?

No idea but you could write a book about unrepresented client incompetence.

You don’t know what you don’t know. It’s known by psychologists as unconscious incompetence.

Thanks (4)
Replying to nenn:
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By FactChecker
26th May 2024 14:45

Why would you expect HMRC, uniquely amongst all other operations/businesses, to publish a guidebook to their own incompetence - a strange concept!

But you are as yet a million miles from ascertaining to whom the 'incompetence' label belongs ... and David's point is that in not seeking professional advice in the first place you have left yourself open to bigger problems.

Hopefully not relevant to you, but are you aware that:
- if HMRC decide that the basis of your 'forecast turnover' was faulty, they can then immediately and *retrospectively* cancel you being on the flat rate scheme .. and you will then owe whatever has not been collected at standard rate.

If you want to continue DiYing it, then start with https://www.gov.uk/hmrc-internal-manuals/vat-annual-accounting-system/va... and then https://www.gov.uk/guidance/flat-rate-scheme-for-small-businesses-vat-no...
BTW I presume you did apply to join both the Annual Accounting Scheme and the Flat Rate Scheme using the single form VAT600AA/FRS?

Personally I'd seek professional advice (which doesn't include whatever you may find on public forums from anonymous posters) ... but it's your life/business.

Thanks (3)
Replying to FactChecker:
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By nenn
26th May 2024 15:04

Thank you for your comments but please can you try to meaningfully contribute to the question?

Why are you on a complete tangent?

I was hoping and would have appreciate some attempt to be helpful and answer questions on the “ask questions” section of a forum.

Is that not what it’s for? To help each other?

You are trying to imply that I am incompetent when I’m clearly trying to find an answer that you don’t have…

I guess the cookie cutter response to every question then is just to seek professional advice, let’s just shut it down!

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Replying to nenn:
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By David Ex
26th May 2024 15:11

nenn wrote:

I was hoping and would have appreciate some attempt to be helpful and answer questions on the “ask questions” section of a forum.

Is that not what it’s for? To help each other?

To help each other?! Hilarious!

These are the site owner’s terms of use:

https://www.accountingweb.co.uk/any-answers/how-to-use-any-answers

“If you intend to plan a course of action based on what you read in here, you should instead be taking professional advice.”

“They are not here to provide free accounting advice.”

Thanks (4)
Replying to David Ex:
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By Paul Crowley
26th May 2024 17:16

+1
It is not intended to be the free weekend advice forum until tuesday when I can ask my accountant/HMRC what went wrong.
Trying to do two things at once will confuse HMRC. There are simple souls and will deal with one of them, and sit back.

HMRC may have read your prior question that says your outputs are £200K, double what you told them

Thanks (2)
Replying to nenn:
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By FactChecker
26th May 2024 15:26

You posted a 'comment' and a question at 26th May 2024 11:28
My response addressed the former and answered the latter ... so I don't know which dictionary you used when picking words like 'meaningfully' and 'tangent'?

And you are very ready to take offence (I never said you were incompetent, merely that you hadn't yet shown to whom the adjective applied in your case) ... but even quicker to issue unwarranted assumptions about others (as in telling me that I don't have an answer).

Where we do agree is "just shut it down!"

Thanks (3)
Replying to nenn:
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By Paul Crowley
26th May 2024 17:10

Remarkable
Unable to read and consider the erudite comments from regulars is a common newbie problem.
The Annual scheme really is for the people that can predict and calculate and get things right first time
Most of us think it is not the best way forward until a pattern has been established.
I have no clients on the annual scheme. You have assisted me in confirming why I advise against it.
Much appreciated.

Thanks (5)
Replying to nenn:
RLI
By lionofludesch
26th May 2024 18:09

nenn wrote:

Is that not what it’s for? To help each other?

It certainly is.

Who have you helped so far?

Or, when you say "help each other", do you mean "help me"?

Thanks (2)
Replying to lionofludesch:
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By Paul Crowley
26th May 2024 18:10

Bullseye

Thanks (2)
Replying to FactChecker:
Tornado
By Tornado
27th May 2024 13:25

Yes, Form VAT 600AA/FRS is the single form to use to apply for Annual Accounting and Flat Rate Scheme at the same time. We do not know if OP used this form.

I have one client on Annual Accounting and this has been the way for decades! There is no advantage now at all, but this company still likes to do it that way.

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By nenn
26th May 2024 15:35

You two both have too much time on your hands and need to get a grip, I will ask this question elsewhere

Thanks (1)
DougScott
By Dougscott
26th May 2024 15:41

I suggest you ring up HMRC and ask them?

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Replying to Dougscott:
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By nenn
26th May 2024 16:01

Thanks Doug, that is the plan but as it is a Sunday I am unable to, I was hoping for some insight before I spoke to them tomorrow

I think it makes logical sense from everything I have read that it should be the flat rate of 6.5% used for the interim payments and they've made a mistake (at-least I hope so!)

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Replying to nenn:
DougScott
By Dougscott
26th May 2024 16:20

If you ring dead on 8am then you may get throught to them without a long wait.....

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Replying to nenn:
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By Paul Crowley
26th May 2024 17:20

Bank Holiday?

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Replying to Paul Crowley:
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By FactChecker
26th May 2024 17:22

Spoilsport! :=)

Thanks (5)
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By Leywood
26th May 2024 17:15

Always makes me chuckle when DIYers think they don’t need an Accountant, yet come on here expecting, even demanding, free advice from Accountants.

Taking tax advice from HMRC is the almost as daft.

Thanks (6)
Replying to Leywood:
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By Paul Crowley
26th May 2024 17:22

Good news.
OP has decided to post on other forums.
Endex for us.

Thanks (4)
Replying to Leywood:
DougScott
By Dougscott
26th May 2024 23:26

Well no one on here seems to know te answer to the OP's question anyway so might as well ring HMRC and ask them - they couldn't possibly lie to him could they?

Thanks (5)