VAT, FRS & CT

[Bluebird]

Anybody know in whcih order these get calculated ?

i.e. If my Invoice b4 vat is £5000 the VAT that I recieve on that is £875 making a total invoice / income of £5875.

Now when I work out the amount that is subject to Corp Tax do I,

a, subtract the £875 + other expenses
b, subtract £625 [ the amount I will pay via FRS ]
c, deduct nothing until I actually pay HMRC and then deduct the £635 from that months invoice / income ?

Thanks

[Sockpuppet]

The extra £250 that you recieve under the flat rate scheme will be subject to CT.

[PAG]

You remove FRS from the invoice amount, and then you remove Expenses.

Remaining is taxed.

The difference between VAT charged and FRS is considered as profit.

[Euro-commuter]

You remove FRS from the invoice amount, and then you remove Expenses.

Remaining is taxed.

The difference between VAT charged and FRS is considered as profit.

which indeed it is. A present from HMRC.

[malvolio]

and you pay CT on all profits made...

[Bluebird]

The extra £250 that you recieve under the flat rate scheme will be subject to CT.

Yep, I know that one, but how do I work out the 'profit' for a month in order to calculate CT ?
Do I ONLY subtract the VAT that I pay, when I pay it ?

Therefore:
Month1 Inv = £5875 - exp £1k = 4875 [less CT of 926 ] Dividend = £3949
Month2 Inv = £5875 - exp £1k = 4875 [less CT of 926 ] Dividend = £3949
Month3 Inv = £5875 - exp [incVAT£1,635] = 4240 [less CT of 806 ] Dividend = £3434

Ie as I have to pay VAT 1/4ly will I always get a month where the divi is a lot less than the others because of the VAT payment ?

[Bigbird]

On your VAT return you put £625 in box 1 and £5875 in box 6 then pay £625.

For calculating CT you take £5000 + £250, then minus your expenses and calculate CT at the prevailing rate on the balance. If you are "putting away" your CT in a high-interet account this is the amount to stash.

Your Divi payment is whatever is left over when you have stashed the CT.

HTH.

[Bigbird]

OK then, going on the figures you posted at the same time as me.....

Per month, invoice £5k + £875 VAT, exp £1k (assuming this includes salary and NI?).
Profit is £4k + £250 = £4250. CT @ 20% = £850. Divi available is £3400.

At the end of the quarter you pay the VAT of £1875.

CT gets paid 9 months after the company year-end.

[malvolio]

How about treating your company cashflow as a quarterly thing and not a day-by-day one? That way you don't have to worry about trival variations week by week. You also pay CT once, 9 months after year end, so you don't have to work it out on a rolling basis.

I've got this much in the bank. This much is VAT to be paid back. I've accumulated these many expenses to pay off. I have to pay out this much in slary, NICs and PAYE. 80% of what's left is mine. How hard is that?
The mistake you make is trying to work out dividends as some kind of regular earnings payment. They aren't, they're paid out of year end profits, although you can withdraw them in advance based on your expectation of those profits. If you wren't so keen on taking every penny out of the company as quickly as possible, you wouldn't be having the discussion.

[PAG]

Yep, I know that one, but how do I work out the 'profit' for a month in order to calculate CT ?
Do I ONLY subtract the VAT that I pay, when I pay it ?

Therefore:
Month1 Inv = £5875 - exp £1k = 4875 [less CT of 926 ] Dividend = £3949
Month2 Inv = £5875 - exp £1k = 4875 [less CT of 926 ] Dividend = £3949
Month3 Inv = £5875 - exp [incVAT£1,635] = 4240 [less CT of 806 ] Dividend = £3434

Ie as I have to pay VAT 1/4ly will I always get a month where the divi is a lot less than the others because of the VAT payment ?

Month3 Inv = £5875 - exp [incVAT£2,905] = 2970 [less CT of 564 ] Dividend = £2406

But I see your point. I suppose if you are doing this monthly you can always deduct FRS VAT due monthly and then do yuo calc. EG

Month1 Inv = £5875 - exp £1k - vat 635 = 4240 [less CT of 806 ] Dividend = £3434
Month2 Inv = £5875 - exp £1k - vat 635 = 4240 [less CT of 806 ] Dividend = £3434
Month3 Inv = £5875 - exp [incVAT£1,635] = 4240 [less CT of 806 ] Dividend = £3434