Autumn statement - end of VAT flat rate scheme?

[blackeye]

FRS can't make a £7200 difference. That implies your turnover is £300,000 and the limit for FRS is £230,000 (including VAT) so £192,000 excluding VAT.

Ok maybe I calculated it wrong...

VAT on invoices = 27,500k
VAT to HMRC = 19,250
Gross VAT saving = £8250
Minus 20% Corp Tax payable (additional profit) = 6,600

Is that incorrect?

[eek]

Ok maybe I calculated it wrong...

VAT on invoices = 27,500k
VAT to HMRC = 19,250
Gross VAT saving = £8250
Minus 20% Corp Tax payable (additional profit) = 6,600

Is that incorrect?

The FRS rateshould be at 14.5% assuming you are a consultant of some form and its 14.5% on your company's total income received including VAT.

VAT on invoices £27,500 so your company's total income including VAT= £165,000.


£165,000*14.5%=£23,925
So your gross VAT saving should have been £3575
Minus 20% Corp Tax payable (additional profit) = £2860

Do you have an accountant as someone some where seems to have messed things up...

[Alan @ BroomeAffinity]

Ok maybe I calculated it wrong...

VAT on invoices = 27,500k
VAT to HMRC = 19,250
Gross VAT saving = £8250
Minus 20% Corp Tax payable (additional profit) = 6,600

Is that incorrect?

Yep. The VAT to HMRC should be £23100. It's 14% of gross not net - assuming 14% is you flat rate.

Please don't take this the wrong way but you're making decisions on faulty data. You shouldn't.

[yorkshireman]

FRS Loss Calculator

I have just been doing some What Ifs on Intouch's FRS Loss calculator and it seems I might lose so much money from switching to 16.5% that I may well find several thousand pounds worth of essential purchases I need to make next year.

With these numbers anything I buy will be free!

[Alan @ BroomeAffinity]

I have just been doing some What Ifs on Intouch's FRS Loss calculator and it seems I might lose so much money from switching to 16.5% that I may well find several thousand pounds worth of essential purchases I need to make next year.

With these numbers anything I buy will be free!

I can't help thinking that there'll be a regulation to prevent this kind of thing too.

[TheCyclingProgrammer]

Not one person has got it right yet.

I beg to differ.

[TheCyclingProgrammer]

Ok maybe I calculated it wrong...

VAT on invoices = 27,500k
VAT to HMRC = 19,250
Gross VAT saving = £8250
Minus 20% Corp Tax payable (additional profit) = 6,600

Is that incorrect?

You don't say what your FRS percentage is but you need to apply it to the gross turnover including VAT.

If you're comparing with the standard VAT scheme you also need to account for any input VAT you've paid to work out your actual saving. Whatever's left from your flat-rate surplus after deducting input VAT and allowing for CT is your net profit from the scheme.

I feel like I've said this a million times in the last few days!

[stek]

Do you have an accountant as someone some where seems to have messed things up...

Or some bigger sheets of paper? Using crayons smudges the numbers when writing small.

[northernladuk]

I beg to differ.

Must have missed it in all the noise

[Waldorf]

I'll be leaving the FRS, it's been a good number but due to some idiots exploiting it HMRC have effectively closed it down. My accountant will do the extra work anyway and in any case I don't claim much in the way of expenses.

Don't forget VAT isn't supposed to a way of making a profit, so be thankful for a good few years and accept that we are going back to the way it used to be.