NEW question re Flat rate vat e-courses..

What percentage flat rate?

Didn't find your answer?

I asked this in another thread but those with kindly replied were more concerned with whether I qualify, so asking again in the hope someone may be able to provide an answer?

I teach specialist online art courses to professional artists worldwide and use a lot of expensive materials (8% of my turnover per year) so will qualify to pay a flat rate VAT.

 My question is what percentage of flat rate I should be paying. I cannot see in the gov list anything that seems relevant. 

Yes my accountantuis on the case but I'm asking as I have very quickly reached the VAT threshold,  three months ago wasn't expecting to for another six months at least but the power of the internet........ 

 

Replies (21)

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By paul.benny
22nd Mar 2021 08:21

Have you misunderstood the flat rate scheme?

Normally, you charge VAT on your income and offset it with the VAT you incur on your inputs and pay the difference to HMRC.

Under the flat rate scheme, you still charge the full 20% on your outputs, ignore VAT incurred on inputs and pay a fixed % to HMRC.

If you are delivering courses to clients around the world, you *may* have a lot of zero-rated or outside scope supplies. This means that FRS wouldn't be suitable for your business.

In addition, your online courses get you into one of the most difficult/confusing areas of VAT, especially given that art tuition potentially cover both business and consumer customers.

I commend your desire to get it right. You really need advice from a VAT specialist - your accountant may not have the expertise.

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Replying to paul.benny:
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By CabraCreative
22nd Mar 2021 08:38

Thanks,.. yes its complicated!. They are B2C and very few of my supplies are zero. I agree flat rate may not be for me, just exploring options...

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Replying to CabraCreative:
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By paul.benny
22nd Mar 2021 09:00

You said you provide courses to 'professional artists'. That doesn't sound like B2C.

This isn't an area of VAT where you can get straightforward answers from a internet forum. It's not a case of exploring options: you need advice from a VAT specialist.

And if you've hit the registration threshold in a couple of months, you can probably afford it.

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Replying to CabraCreative:
chips_at_mattersey
By Les Howard
22nd Mar 2021 09:29

If you are working with professional artists, I would expect your sales will be B2B. If so, then the FRS is not likely to be helpful to you.

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Replying to CabraCreative:
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By paul.benny
22nd Mar 2021 16:29

deleted - posted in wrong place on thread

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Stepurhan
By stepurhan
22nd Mar 2021 08:52

It took several rounds of questions from respondents before you told us what you did. This is why such questions are best addressed to your own accountant. They already know about your business.

You have wasted everyone's time by simply saying you are doing online courses without stating this pertinent fact. Since you are now doing this on Monday, when you should be able to contact your alleged accountant, I have trouble believing they exist.

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Replying to stepurhan:
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By CabraCreative
22nd Mar 2021 14:34

No need to be so rude...you didn't have to engage in any conversation! I only started this six months ago and its been a rollercoaster. I only hired an accountant a month ago... running to catch up with myself and the demand worldwide for my products But thank you graciously for your time, albeit reluctantly given!

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By rmillaree
22nd Mar 2021 08:54

Heres the really useful list

Note as paul.benny has warned you need to make sure you understand the full concepts here. Note none of the categories are as good as they may seem at fisrt glance as the flat rate is calculated on vat inclusive turnover.

I suspect if you primarily do training you may be in business services not listed elsewhere - that would be 12% (1% discount first year of registration taking you to 11% temporarily)

https://www.gov.uk/hmrc-internal-manuals/vat-flat-rate-scheme/frs7200#ID...

Lets crunch te numbers on 12%

Sales £1000 net + £200 vat (you still charge 20% vat !!!!!) = £1200
Flat rate vat payable £1200 * 12% = £144 (14.4% of net invoice value before vat !!!)

Normal vat = £1200 * 92%= £1104 * vat fraction (1/6) = £184 vat due on sales less cost of sales (presuming vat billed on cost of sales items)

However on normal vat you can alos claim vat on other buisness expenses so you would need to calculate other expenses on which vat paid as % of sales.

If we say 20% of gross income goes on other vatable expenses that would be 1200 * .2 = 240 * 1/6 = £40

oh that works out at exact breakeven - not a fix i promise - hopefully thats a starter for 10 as to how things may work - if you are other vatable expenses light i supect flat rate may be beneficial - if you are other vatable expenses heavy then normal vat may be better.

No need to choose flat rate till you are ready to submit your first return.

Note if you acountant is decent they will be right on the ball in this regard - its probably a decent test of their skills how proactive they are here. Work is involved though doing the calcs so if you are wanting to do your own vat and are trying to avoid fees you may not get full chapter and verse from your acocountant!

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Replying to rmillaree:
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By CabraCreative
22nd Mar 2021 14:35

thank you do much for your detailed and helpful response.

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Replying to rmillaree:
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By CabraCreative
22nd Mar 2021 14:40

thank you so much for your detailed and helpful response.

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By Paul Crowley
22nd Mar 2021 08:55

https://www.accountingweb.co.uk/any-answers/flat-rate-vat-e-courses

Not really a new question

Best left to the 'accountant'

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Replying to Paul Crowley:
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By CabraCreative
22nd Mar 2021 14:44

Aplogies..new to this forum, and new to running a business, its been a rollercoaster I only started 6months ago, I only hired an accountant a month ago, now a limited company and registering for VAT...... running to catch up with myself and the demand worldwide for my products But thank you graciously for your time!

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Replying to CabraCreative:
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By Paul Crowley
22nd Mar 2021 16:26

BIGGEST CRITICAL MATTER LEFT OUT

'Now a company'

So only company sales matter
clock for VAT restarted with company

When did company start trading?

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Replying to Paul Crowley:
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By CabraCreative
22nd Mar 2021 16:40

Really? I didn't know that.... until last month was sole trader, now limited company, so no turnover before then counts as vat ?

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Stepurhan
By stepurhan
22nd Mar 2021 08:56

I would further note that the flat rate percentages are broad brush (if you'll pardon the pun) figures. With supplies as expensive as yours, it is quite likely that any flat rate that would fit would be costly to you. Again, an accountant that knows your business would be able to confirm this.

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VAT
By Jason Croke
22nd Mar 2021 08:59

https://www.gov.uk/hmrc-internal-manuals/vat-flat-rate-scheme/frs7200 has an extended list of trades and sectors.

You perhaps fit under the definition of "education" which is 12.5%, or you can go with "any other activity not listed elsewhere" which is 12% and I doubt HMRC will have much issue whichever you decide.

The flat rate descriptions haven't been updated in years, so it is not always the case of finding an exact fit to what you are doing., which is why there has always been an "any other activity not listed" definition.

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Replying to Jason Croke:
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By CabraCreative
22nd Mar 2021 14:46

Thank you!

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By paul.benny
22nd Mar 2021 09:16

Are you even sure that you are in scope for VAT?

Private tuition of subjects ordinarily taught in a school or university is Exempt. It's a while since I was at school, but art was definitely on the curriculum then.

You need a VAT specialist (did I say that already?).

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Replying to paul.benny:
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By rmillaree
22nd Mar 2021 13:03

"Private tuition of subjects ordinarily taught in a school or university is Exempt"

I would have said MAY be exempt rather than is Exempt ! - 701/30 section 6 has further details.

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By Matrix
22nd Mar 2021 13:48

Sorry I don’t know the answer to the flat rate question but I would get bespoke VAT advice on all of the points raised, even if they did not address your question.

Which supplies have you included as taxable supplies you are making when you determined that you had reached the threshold? You don’t include supplies which are outside the scope of VAT.

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By paul.benny
22nd Mar 2021 16:45

CabraCreative wrote:

.. yes its complicated


and
CabraCreative wrote:
Really? I didn't know that

That's why:

paul.benny wrote:
You need advice from a VAT specialist

stepurhan wrote:
an accountant that knows your business

matrix wrote:
I would get bespoke VAT advice on all of the points raised

Since you don't seem to want to heed that advice, I'm out.

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