Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
That's normally Capital Expenditure which doesn't count, but you could create an accounting policy to only capitalize items over a certain threshold if your accountant agrees.
Yes, effectively the flat rate scheme has been abolished, in the sense that it would make no sense to continue to use it. You'd save more going on the normal VAT regime, you can then reclaim VAT on expenses.
However expect your contractor accountant costs to go up (assuming they do bookkeeping and VAT returns for you).
However expect your contractor accountant costs to go up (assuming they do bookkeeping and VAT returns for you).
Not sure about that tbh. There's not a lot more to do if the contractor uses something like freeagent. Expect a bigger drive to get contractors into cloud accounting.
Most contractors will lose money if they use the VAT FRS from April
£100000 income + 20%VAT = £100000 + £20000 = £120000
£120000 * 16.5% = £19800 to pay to HMRC
Which means that you have to pay £19800 out of the £20000 to HMRC leaving you with £200 and no ability to claim any VAT back on anything (including accountancy fees).
Now my accountant charges me £90 + VAT per month which works out at £216 VAT annually which is obviously not covered by the £200
If you are not on the FRS scheme you would have to pay £20000 - £216 = £19784 which is a saving of £16. I know it is not a lot but it is worse the lower you are under £100K
If your are comfortably under the VAT deregistration threshold it might be worth deregistering completely.
The problem, as with many things HMRC,is that the FRS was ill-conceived in the first place, and ambiguous and therefore subject to abuse. If it was done properly in the first place, the rates would be nearer the amounts you'd pay in the standard method. The frs was designed to simplify the admin around VAT. The gain we all made on it was simply a by-product.
Comment