Good morning. A client is being inspected and I wonder what experiences you can share as to the records that will be reviewed when the client is using the flat rate scheme? I wonder if Accounts and Sales records would be adequate to support the returns submitted?
Thanks
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I have an HMRC booklet here entitled "Flat Rate Scheme for Small Businesses". With regards to record keeping, it states:
"There is a requirement to keep a record of sales and purchases. But, for businesses using the scheme, that record does not have to analyse gross, VAT and net separately. The records (whether normal system or flat rate scheme) need only be complete, orderly and easy to follow."
I would assume that if a business uses the flat rate scheme, the inspector would not be interested in looking at any purchase records as long as there were no capital purchases over £2000 which can be reclaimed under the flat rate scheme.
accounts turnover
You will need to reconcile the turnover shown in the accounts to the VAT returns.
This is an area often neglected, but it is important because it can highlight discrepancies.