VAT Flat Rate

[Bluebird]

4.5 Reduction of 1% for new VAT registrations
If you are in your first year of VAT registration you get a 1% reduction in flat rate. This means you can take 1% off the flat rate you apply to your turnover, until the day before your first anniversary of becoming VAT registered.
Example 1

A business registers for VAT on 1 December 2005 and uses the flat rate scheme from that date with a flat rate of 10%. From 1 December 2005 to 30 November 2006 it can use 9% if there are no changes to the business during this time.
Example 2

A business registers for VAT on 6 January 2006 but does not join the flat rate scheme until 1 July 2006 at a rate of 6%. From 1 July 2006 to 5 January 2007 it may use 5% if there are no changes to the business during this time.

[TheFaQQer]

Strictly, its 12 months from the date that you registered on the flat rate scheme (so, you could have registered for VAT on 1 August, changed to the FRS VAT scheme on 1 September - your discount applies until 31 August of the next year)

No it's not.

It's 12 months from VAT registration - so if you leave it 1 year after registering before moving onto the FRS, you pay the full rate with no discount.

[PAG]

No it's not.

It's 12 months from VAT registration - so if you leave it 1 year after registering before moving onto the FRS, you pay the full rate with no discount.

Ok, what happens with following scenario

Company registered in 1 July2006
Registered for VAT 1 October 2006 with FRS
Started trading from day 1. (1 July)


Now, when I received my VAT no in October … I backdate all my invoices and charge VAT.

Does that mean that I benefit 1% until 30 Sept 2007 ??? If so, that means I benefited 1% for 16 months ???

[Bluebird]

If you registered for VAT from 1/10/06 - you have no right invoicing VAT prior to this date - thats fraud.

You can only get 12 months at the reduced rate from the date on your flat rate cert to 12 months hence.

[Gonzo]

Ok, what happens with following scenario

Company registered in 1 July2006
Registered for VAT 1 October 2006 with FRS
Started trading from day 1. (1 July)


Now, when I received my VAT no in October … I backdate all my invoices and charge VAT.

Does that mean that I benefit 1% until 30 Sept 2007 ??? If so, that means I benefited 1% for 16 months ???

You won't have to pay VAT on the invoices prior to 1 October, so if you have backdated all your invoices for VAT to 1 July then you would be benefitting from 17.5% for three months. I suspect that that would not be legal though

[PAG]

You won't have to pay VAT on the invoices prior to 1 October, so if you have backdated all your invoices for VAT to 1 July then you would be benefitting from 17.5% for three months. I suspect that that would not be legal though

Invoice 1 Net Amount Paid - VAT pending
Invoice 2 Net Amount Paid - VAT pending
Invoice 3 Gross (Net + VAT) Amount Paid + VAT for invoice 1 & 2.

1 month (or 2) later you receive 1 VAT return form ... pay all the VAT for all invoices.

The above process was confirmed with an accountant. Any accountant on the forum can shed light ??

[Bluebird]

Invoice 1 Net Amount Paid - VAT pending
Invoice 2 Net Amount Paid - VAT pending
Invoice 3 Gross (Net + VAT) Amount Paid + VAT for invoice 1 & 2.

1 month (or 2) later you receive 1 VAT return form ... pay all the VAT for all invoices.

The above process was confirmed with an accountant. Any accountant on the forum can shed light ??

1. What periods do invoices 1 & 2 cover [and 3 for that matter]?
2. What date is on your PD13112 form ? [ VAT Cert ]
3. What date is on your VAT 85 Letter confirming Flat Rate Scheme Approval ?

Let us know and we can probably provide better advise.

[PAG]

1. What periods do invoices 1 & 2 cover [and 3 for that matter]?
2. What date is on your PD13112 form ? [ VAT Cert ]
3. What date is on your VAT 85 Letter confirming Flat Rate Scheme Approval ?

Let us know and we can probably provide better advise.

Spoke to my accountant ....
he told me that at the time of VAT registration he ticked box something along the line ... 'VAT applicable from the time company was elected (formed)', I did not fill-in the VAT form all was done by my accountant.

Hence I could backdate my VAT invoices and 1% benefit of flat rate scheme ends 1 year after the company was registered.

Hope this helps someone else.