+ Reply to Thread
Page 1 of 3 1 2 3 LastLast
Posts 1 to 10 of 27
  1. #1

    Nervous Newbie


    Join Date
    Sep 2011
    Posts
    16
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    0
    Likes (Received)
    0

    Default VAT registered - But not flat rate registered yet - Am I losing money?

    I have a VAT registration number which I have provided to client co. Looks like I need to do a bit more before I am registered for flat rate - does that mean I am losing out on the 20% - 14.5% until then?

    Or does it mean I will lose the money only if the flat rate registration is still not done by the time the VAT is actually paid - err, there is something called the VAT quarter end, right?

    If the quarter doesn't matter and only the date of the invoice matters - then would it be fine if I don't raise invoices until I am registered for the flat rate?

    Also, is it right that VAT registration and flat rate registration are two separate activities that need to be done? (I am not sure if I filled in a choice when doing the initial VAT registration on the HMRC website.)

    (I don't have an accountant yet. Will be appointing one ASAP.)

    Thanks for your help!

  2. #2

    More time posting than coding


    Join Date
    Apr 2010
    Posts
    425
    Thanks (Given)
    0
    Thanks (Received)
    13
    Likes (Given)
    0
    Likes (Received)
    67

    Default

    Quote Originally Posted by myco View Post
    does that mean I am losing out on the 20% - 14.5% until then?
    for starters you do know its 14.5% of the Gross (1% discount for 1st year)

    your invoice = 100K + 20% VAT = 120K, you pay vat on FRV = 17.4K thus saving 2.6K per year

  3. #3

    Double Godlike!

    SueEllen's Avatar
    Join Date
    Nov 2005
    Location
    in the Park
    Posts
    10,653
    Thanks (Given)
    14
    Thanks (Received)
    56
    Likes (Given)
    512
    Likes (Received)
    237

    Default

    If you haven't registered for the FRS then you need to put down both the VAT you received for your services (output tax) and the VAT you paid on any business supplies you brought (input tax) i.e. stationary, computer consumables, computer equipment, accountancy fees, subsistence. The difference will be the VAT you have to pay to HMRC (or the amount they have to reimburse you).

    In other words not being on the FRS just makes filling in your VAT return more tedious as you need to look at the receipts of everything you brought for the business and add up the VAT on them. You need to remember that some items like postage stamps are exempt for VAT and other things are zero rated.

    If you need help then read the relevant sections here - HM Revenue & Customs: VAT and then phone the VAT helpline for more information. They tend to be helpful if you don't sound like a complete idiot.

    BTW the vat people do offer free courses of about 2 hours on different aspects of VAT.

  4. #4

    Nervous Newbie


    Join Date
    Sep 2011
    Posts
    16
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    0
    Likes (Received)
    0

    Default

    What applies if I register for FRS after a couple of invoices but before the VAT quarter end when the VAT return is filed?

  5. #5

    More time posting than coding

    Greg@CapitalCity's Avatar
    Join Date
    Jun 2011
    Location
    London, UK
    Posts
    452
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    0
    Likes (Received)
    0

    Default

    Yes, you are losing out on the benefits of the flat rate scheme, until you actually register your company into the scheme. Doing this is easy. Fill in the form (VAT 600FRS - Application to join the Flat Rate Scheme) and then email it to frsapplications@hmrc.gsi.gov.uk.

    You need to specify when you want the FRS to be effective from, and generally the HMRC will not allow you to retrospectively do this for VAT periods that have already had a VAT return filed for them. If this is your first VAT period, and say you became registered for VAT effective from 01 August 2011, then get a FRS scheme application in ASAP stating a start date of 01 Aug 2011.
    2012 CUK Reader Awards - '...Capital City Accountancy, all of whom were outside the top three yet still won compliments from CUK readers for their services' - well, its not an award, but we'll take it! - Best Accountant (for IT contractors) category
    2011 CUK Reader Awards - Top 3 - Best Accountant (for IT contractors) category
    || Check us out at: http://www.linkedin.com/company/capi...ccountancy-ltd

  6. #6

    Nervous Newbie


    Join Date
    Sep 2011
    Posts
    16
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    0
    Likes (Received)
    0

    Default

    Quote Originally Posted by Greg@CapitalCity View Post
    Yes, you are losing out on the benefits of the flat rate scheme, until you actually register your company into the scheme. Doing this is easy. Fill in the form (VAT 600FRS - Application to join the Flat Rate Scheme) and then email it to frsapplications@hmrc.gsi.gov.uk.

    You need to specify when you want the FRS to be effective from, and generally the HMRC will not allow you to retrospectively do this for VAT periods that have already had a VAT return filed for them. If this is your first VAT period, and say you became registered for VAT effective from 01 August 2011, then get a FRS scheme application in ASAP stating a start date of 01 Aug 2011.
    Yes, this is my first VAT period.

    I do not have any other invoices so far. So I won't lose anything if my invoice falls after FRS effective date, right?

    Now let's say I bought a laptop for company on August 10. Would it be ok to ask for FRS effective date to be August 11 and then claim VAT back on the laptop and since my invoices will still be from after August 11, I won't lose anything there.

    Just that part of the quarter will be non-flat rate and part of it will be flat rate. Does that work ok?

    (Thanks for the response!)

  7. #7

    More time posting than coding

    Greg@CapitalCity's Avatar
    Join Date
    Jun 2011
    Location
    London, UK
    Posts
    452
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    0
    Likes (Received)
    0

    Default

    Hi myco,

    I believe you can only join the flat rate scheme on the first day of a VAT accounting period. So this would either be your first day of VAT registration, or the first day of your next VAT accounting period.

    The treatment of your invoices depends on their taxpoint date, and for most contractors the taxpoint date (or date of supply) is the date you;
    (a) issue a VAT invoice; or
    (b) receive a payment, whichever happens first.

    It stands to reason then that you could stay on the standard rate scheme for the first VAT period, and buy all the company equipment you need (and raise no invoices/receive no payments), and then in the next VAT period register for the flat rate scheme, and raise all your invoices at that point. Even so, from a VAT position you may just be better to register for the flat rate scheme from the get-go. This decision would be based on how much you expect to invoice in your first VAT period, and how much VAT you anticipate spending on company purchases.
    2012 CUK Reader Awards - '...Capital City Accountancy, all of whom were outside the top three yet still won compliments from CUK readers for their services' - well, its not an award, but we'll take it! - Best Accountant (for IT contractors) category
    2011 CUK Reader Awards - Top 3 - Best Accountant (for IT contractors) category
    || Check us out at: http://www.linkedin.com/company/capi...ccountancy-ltd

  8. #8

    Double Godlike!

    SueEllen's Avatar
    Join Date
    Nov 2005
    Location
    in the Park
    Posts
    10,653
    Thanks (Given)
    14
    Thanks (Received)
    56
    Likes (Given)
    512
    Likes (Received)
    237

    Default

    Quote Originally Posted by myco View Post

    Now let's say I bought a laptop for company on August 10. Would it be ok to ask for FRS effective date to be August 11 and then claim VAT back on the laptop and since my invoices will still be from after August 11, I won't lose anything there.
    Depending on the cost of your laptop you may not want to be on the FRS this quarter.

    If the cost of the laptop is less than 2000 excluding the VAT then it's better not to be on the FRS yet as you get VAT back. HMRC VAT do reimburse people.

    So in this quarter I would probably buy everything (within reason) that I need for the business as then you would get the VAT back. I would even book, get an invoice and pay for a training course as well as you can't claim that back however much the cost once you are on the FRS.

    In theory on the FRS you gain if you don't buy a lot of supplies and equipment for your business or stay in hotels away from home.

    I would do a search on this forum for VAT and the Flat Rate Scheme as well as read HMRC pages.

  9. #9

    Banned


    Join Date
    Apr 2011
    Location
    What's it to you?
    Posts
    1,251
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    0
    Likes (Received)
    0

    Default

    As an aside, I was of the understanding if the invoice was over 2000 inc VAT (e.g. 1667 + VAT), you can reclaim the VAT. Is this right?

  10. #10

    Super poster

    Clare@InTouch's Avatar
    Join Date
    Feb 2010
    Location
    Bournemouth
    Posts
    2,391
    Thanks (Given)
    18
    Thanks (Received)
    63
    Likes (Given)
    172
    Likes (Received)
    167

    Default

    Quote Originally Posted by Zoiderman View Post
    As an aside, I was of the understanding if the invoice was over 2000 inc VAT (e.g. 1667 + VAT), you can reclaim the VAT. Is this right?
    Yes, if it's a capital asset. It doesn't have to be one item either, it can be a package deal such as a computer, scanner, printer etc.

+ Reply to Thread
Page 1 of 3 1 2 3 LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts

Content Relevant URLs by vBSEO 3.6.0 ©2011, Crawlability, Inc.