Flat Rate VAT Q1

[ContrataxLtd]

Yes.

Your FRS payment is £9.58 lower. But if you've had any costs, you would have paid input VAT which you cannot reclaim.

Your calculations show you have a surplus of £9.58 for the quarter on the FRS. If your input VAT is higher than this than you're actually worse off on the FRS.

Unless I'm getting confused TCP isn't Le3ky saying he's done both calculations, one under standard VAT and one under FRS and the FRS one is £9.58 lower and therefore he's marginally better of on FRS at the moment?

I've recorded all my expenses including the VAT element. FA has completed the VAT return for me based on not being on the FRS. So I know what I would have to pay if I was not on the scheme. Which is Output VAT minus Input VAT.

I've worked out the figure I will actually have to pay because I am on the FRS, which is 15.5% of my "total cost of sales plus Output VAT". That payment to HMRC is £9.58 lower than the "Output VAT minus Input VAT".

[TheCyclingProgrammer]

Unless I'm getting confused TCP isn't Le3ky saying he's done both calculations, one under standard VAT and one under FRS and the FRS one is £9.58 lower and therefore he's marginally better of on FRS at the moment?

Yes, you're right, I think I misread the original post.

The simplest way to think about it is if your FRS surplus (whatever you have left on top of your net turnover after paying your VAT bill) is less than your input VAT for the period, you'll be better off on the standard scheme.

[radish2008]

Yeah, they didn't put me on the FRS in my Q1 for that exact reason. I bought a lot of equipment including an expensive laptop. Worked out much better as I hadn't billed much by then. And remember the £2000 thing. If a single invoice is at least £2k you can reclaim the VAT even while on FRS.

Just out of interest can you reclaim the 20% on the FULL amount of the purchase or only on the proportion that goes over £2k ?

[BrilloPad]

Just out of interest can you reclaim the 20% on the FULL amount of the purchase or only on the proportion that goes over £2k ?

On the full amount.

[l35kee]

Just out of interest can you reclaim the 20% on the FULL amount of the purchase or only on the proportion that goes over £2k ?

So if you're on the FRS and gonna be buying something (or things at the same time/same place) that comes to about £1600, it's a smart idea to add £400 worth of more stuff to your basket.