VAT Flat Rate Scheme Update

[northernladuk]

Only if you can reclaim VAT on the fixed penalty :P

Erm... You can't?? It was on business so no problems with it going through the company but didn't think about the VAT. Hmm..

Including the bus lane, right?

bastard

[psychocandy]

I got the same advice as PC (from one of the big contractor accountants) -
[INDENT][/Our advice
Traders that are using the Flat Rate Scheme and are still within the first 12 months of VAT registration will still be eligible for the 1% first year discount. This remains the most tax efficient and simplistic scheme to calculate your VAT liability.

If you have been a user of the Flat Rate Scheme, have been VAT registered for more than one year and will be deemed a limited cost trader, leaving the scheme and accounting for VAT under the standard calculation method can produce a relatively insignificant sum of between £78-£128 per annum (based on turnover of between £60k-£90K per annum and reclaiming input VAT on accountancy fees alone). To reclaim input VAT on eligible purchases under this method you will be required to analyse and provide VAT receipts to support each purchase. This of course will require your additional time for potentially minimal benefit, dependent upon your level of expenditure eligible for reclaim, From the clients that we have spoken to so far, they have decided to stay on our current arrangement, but of course it is for you to decide in regards to your own personal circumstances.

INDENT]

Seem to be 'advising' us to stay in the FRS but forgot to mention that you should consider other vatable expenses such as mobile phone, insurances, travel, IT equipment etc which for most of us make the benefit of leaving FRS worth a lot more than the 'relatively insignificant sum of between £78-£128 '

Same accountants I think....

Yes. Assuming your going to leave FRS then everything becomes VAT claimable doesn't it?

Accountants Fees, Mobile phone charges, hotels (if allowed expenses).

[SueEllen]

Same accountants I think....

Yes. Assuming your going to leave FRS then everything becomes VAT claimable doesn't it?

Accountants Fees, Mobile phone charges, hotels (if allowed expenses).

Yep.

[Lost It]

Depends on what it is. Clothing is also a bare necessity of life. Suits and general office gear don't count.

Hmm. I have to wear state mandated PPE when I use my motorcycle to get to work. Hats... So that's claimable as a business expense isn't it?

Carbon Fibre hat with all the bells and whistles coming right up....

[SueEllen]

Hmm. I have to wear state mandated PPE when I use my motorcycle to get to work. Hats... So that's claimable as a business expense isn't it?

Carbon Fibre hat with all the bells and whistles coming right up....

Ok this is getting silly now.

This is the basics - linky

This is from the government if you are self-employed linky

And this is if you are not linky

[northernladuk]

Hmm. I have to wear state mandated PPE when I use my motorcycle to get to work. Hats... So that's claimable as a business expense isn't it?

Carbon Fibre hat with all the bells and whistles coming right up....

Not when you are getting to work... When you are getting to a client site maybe

And it still comes out of your pocket ultimately. Just a bit discounted.

[SueEllen]

Hmm. I have to wear state mandated PPE when I use my motorcycle to get to work. Hats... So that's claimable as a business expense isn't it?

Carbon Fibre hat with all the bells and whistles coming right up....

Make sure it has your company logo on it and you wear it on client sites.

[TheCyclingProgrammer]

Yes. Assuming your going to leave FRS then everything becomes VAT claimable doesn't it?

Accountants Fees, Mobile phone charges, hotels (if allowed expenses).

Just be aware that in certain cases, if there's some mixed use, you may need to apportion your VAT reclaim. This wasn't necessary on the FRS (if you were reclaiming the VAT on capital assets over £2k), regardless of any non-business use.

[MrC]

https://www.gov.uk/government/public...esses#section9
Under section 9.

The only exception to this is if you cease to use the FRS, but immediately start to use the cash accounting scheme described in VAT Notice 731 Cash accounting. Any business that leaves the Flat Rate Scheme and immediately starts to use the Cash Accounting Scheme should apply the appropriate flat rate percentage to any supplies made while part of the Flat Rate Scheme when payment for those supplies is received.


So if I'm understanding this correctly- assuming April 1st switch from flat to standard schemes which is mid vat quarter....

invoice raised in march under flat rate then paid in April gets the 14.5% rate applied and hence the FRS benefit even though operating on cash based method.

In effect then your final part-quarter is effectively invoice based even though you're on cash method going to vat cash accounting.

Sounds good. Am I getting it wrong?

If I'm right I'm thinking setting freeagent to invoice-based for the first part-quarter will illicit the required figures. Concur?

[psychocandy]

Well, worked it out. For me, even with just accountants fees and mobile phone its about £100 a year.

Add in things like hotels, stationery, misc etc surely its worth it?

I remember contracting pre-FRS and it wasnt that hard. After all, most us will only submit 4-5 invoices and max per month and its not like we're buying loads of stock etc.