Autumn statement - end of VAT flat rate scheme?

[Lance]

£10k -- incl VAT 12k
at a 16.5 % rate you keep £350
to be able to claim 350 VAT back at 20% you need to spend 350/20*100 =£1750

It's actually a bit less as you pay 20% corporation tax over the 350, which I forgot in my original calculation, so it would be 280 nett so 280/20*100=£1400.
So if you have VAT-ed expenses of £1400 or more per month on a 10k per month rate it is better not to be on the flat rate anymore after the 16.5% comes into effect

???

10k + VAT = £12k. On FRS at 16.5% you pay £1980 VAT
on normal VAT you pay £2000 VAT. The difference is £20 not £350.

FRS is a calculated gross, std VAT is calculated net.

[Dylan]

£10k -- incl VAT 12k
at a 16.5 % rate you keep £350
to be able to claim 350 VAT back at 20% you need to spend 350/20*100 =£1750

It's actually a bit less as you pay 20% corporation tax over the 350, which I forgot in my original calculation, so it would be 280 nett so 280/20*100=£1400.
So if you have VAT-ed expenses of £1400 or more per month on a 10k per month rate it is better not to be on the flat rate anymore after the 16.5% comes into effect

[TheCyclingProgrammer]

£10k -- incl VAT 12k
at a 16.5 % rate you keep £350

No, you'd keep £20.

£12000 * 16.5% = £1980
£12000 - £1980 = £20

to be able to claim 350 VAT back at 20% you need to spend 350/20*100 =£1750

There is no minimum threshold for claiming anything back on the standard VAT scheme. You claim back any input VAT you pay - the whole thing is revenue neutral.

It's actually a bit less as you pay 20% corporation tax over the 350, which I forgot in my original calculation, so it would be 280 nett so 280/20*100=£1400.
So if you have VAT-ed expenses of £1400 or more per month on a 10k per month rate it is better not to be on the flat rate anymore after the 16.5% comes into effect

I honestly have no idea what you're talking about and I don't think you do either. Try reading the rest of the thread where the correct calculations have been mentioned several times.

On the FRS the difference between the gross cost and the VAT you pay to HMRC is taxable surplus income. Any input VAT you pay is a tax-deductible expense, ergo the difference between your FRS surplus and the total input VAT is effectively your profit from the scheme and will be taxable.

On the standard scheme you pay HMRC the output VAT you've charged less the input VAT you've paid. The whole thing is revenue and corporation tax neutral.

[northernladuk]

Not enough people speaking to their accountants IMO.

[Eirikur]

???

10k + VAT = £12k. On FRS at 16.5% you pay £1980 VAT
on normal VAT you pay £2000 VAT. The difference is £20 not £350.

FRS is a calculated gross, std VAT is calculated net.

you clearly don't understand it or are bad a maths or both
if you're on flat rate you receive 2000 VAT from the agency or your client and you pay 1650 to HMRC VAT
so you keep 350 in your pocket over which you pay 20% corporation tax which leave you with 280 Nett in your pocket
If you're not on a flat rate you pay the full 2000 to HMRC minus whatever VAT you paid to others and zero in your pocket so to go on full VAT rate is only profitable if you're expenses are £1400+VAT or over else you should stay on flat rate.

[Dylan]

you clearly don't understand it or are bad a maths or both
if you're on flat rate you receive 2000 VAT from the agency or your client and you pay 1650 to HMRC VAT
so you keep 350 in your pocket over which you pay 20% corporation tax which leave you with 280 Nett in your pocket
If you're not on a flat rate you pay the full 2000 to HMRC minus whatever VAT you paid to others and zero in your pocket so to go on full VAT rate is only profitable if you're expenses are £1400+VAT or over else you should stay on flat rate.

you clearly don't understand it or are bad a maths or both

[eek]

you clearly don't understand it or are bad a maths or both
if you're on flat rate you receive 2000 VAT from the agency or your client and you pay 1650 to HMRC VAT
so you keep 350 in your pocket over which you pay 20% corporation tax which leave you with 280 Nett in your pocket
If you're not on a flat rate you pay the full 2000 to HMRC minus whatever VAT you paid to others and zero in your pocket so to go on full VAT rate is only profitable if you're expenses are £1400+VAT or over else you should stay on flat rate.

And clearly you don't either.

You charge the agency £10,000 a month + £2000 in VAT

On the FRS scheme you (assuming 14.5% rate) you paid VAT to HMRC at £12,000 * 14.5% = £1760. So there was £240 difference / profit.

Now under the FRS scheme you pay VAT back to HMRC at £12,000 * 16.5% = £1980. So there is only £20 profit from the FRS scheme.

[pr1]

you clearly don't understand it or are bad a maths or both
if you're on flat rate you receive 2000 VAT from the agency or your client and you pay 1650 to HMRC VAT
so you keep 350 in your pocket over which you pay 20% corporation tax which leave you with 280 Nett in your pocket
If you're not on a flat rate you pay the full 2000 to HMRC minus whatever VAT you paid to others and zero in your pocket so to go on full VAT rate is only profitable if you're expenses are £1400+VAT or over else you should stay on flat rate.

net invoice =X
gross invoice =1.2X
(VAT received =0.2X)

VAT to pay to tax man (16.5% FRS) = 0.165*1.2*X =0.198X

VAT kept = 0.2X-0.198X = 0.002X

please disprove my maths

[Eirikur]

And clearly you don't either.

You charge the agency £10,000 a month + £2000 in VAT

On the FRS scheme you (assuming 14.5% rate) you paid VAT to HMRC at £12,000 * 14.5% = £1760. So there was £240 difference / profit.

Now under the FRS scheme you pay VAT back to HMRC at £12,000 * 16.5% = £1980. So there is only £20 profit from the FRS scheme.

ok I admit I'm wrong I my mistake was it's 16.5 over 12000 and not 16.5 over 10000

[Alan @ BroomeAffinity]

Not enough people speaking to their accountants IMO.

I beg to differ [emoji3]