Flat Rate VAT - VAT on Bank Interest?

[Alan @ BroomeAffinity]

[QUOTE=diesel;694664]so whats the conclusion from this thread? Is VAT is payable on Interest or not?QUOTE]

YES.

[diesel]

[QUOTE=Just1morethen;694755]

so whats the conclusion from this thread? Is VAT is payable on Interest or not?QUOTE]

YES.

Thanks for concluding that. Therefore how does one claim the VAT from the bank?

[THEPUMA]

Thanks for concluding that. Therefore how does one claim the VAT from the bank?

It is exempt. Therefore you can't charge VAT.

[Alan @ BroomeAffinity]

[QUOTE=diesel;694786]

Thanks for concluding that. Therefore how does one claim the VAT from the bank?

You don't. You just pay the VAT on your VAT return.

Its not right, but its correct.

[blacjac]

http://customs.hmrc.gov.uk/channelsP...ent#P211_19578

Section 4.1

"Interest received on money deposited is consideration for an exempt supply."

Why did you not quote the main headings and the rest of section 4.1?

Is that because section 4 and 4.1 deal with the company charging interest on credit given, not receiving interest from banks?

4.Credit and related services
top ^4.1 Loans, granting of credit and advances
If in the course of your business for a consideration you

supply credit
advance money in the form of loans
provide overdrafts or other advances
your supply is exempt. The charge you make for a loan, advance or credit facility is usually described as interest. The value of the exempt supply in the grant of credit or loan is the gross interest or other sum received, but not the repayment of capital loaned.

Interest received on money deposited is consideration for an exempt supply.

[THEPUMA]

Why did you not quote the main headings and the rest of section 4.1?

Is that because section 4 and 4.1 deal with the company charging interest on credit given, not receiving interest from banks?

Because I thought that might confuse you, which it clearly has.

I am bored now. I know that the answer is correct. I have researched it myself and concluded that it is correct. HMRC have said it is correct. My VAT partner has told me it is correct. The combined wisdom of the PCG (on their forum) agree that it is correct. There is no accountant on this forum arguing that it is incorrect (in fact my only reservation is that Just1morethen agrees it is correct - although he did take some convincing).

You may not like the answer because it means you owe some money and have a crap accountant but you really need to deal with that.

[Alan @ BroomeAffinity]

You may not like the answer because it means you owe some money and have a crap accountant but you really need to deal with that.

In fairness, thats a bit strong: Not knowing this doesn't make you a crap accountant. I don't think anybody can argue that this information is both obscure and contradictory so its not surprising that even most accountants (the veritable Puma excluded of course) don't know about it.

[THEPUMA]

In fairness, thats a bit strong: Not knowing this doesn't make you a crap accountant. I don't think anybody can argue that this information is both obscure and contradictory so its not surprising that even most accountants (the veritable Puma excluded of course) don't know about it.

I agree that it wouldn't make you a crap accountant not to realise in the first place, but to continue to argue the case once the anomaly has been brought to your attention is pretty bad.

[QwertyBerty]

So in the accounts do I state turnover is "the sum of sales (inc. VAT) and gross bank interest received less FRS VAT at 13%" and therefore not bother to itemise bank interest separately in Box 6 in CT600?

QB.

[blacjac]

I agree that it wouldn't make you a crap accountant not to realise in the first place, but to continue to argue the case once the anomaly has been brought to your attention is pretty bad.

Please point out the exact place that states Interest received from Bank Accounts is included in your turnover for the purposes of calculating FRS VAT.

The main point that is being missed is that there is a difference between interest your company charges on loans and the interest it receives from bank accounts. Lots of people have posted information on the former being included, nobody has on the later......