Simple VAT Question

[Archangel]

Grrrr. The document you are quoting from is the criteria for JOINING the flat rate scheme it is NOT about how to fill in your VAT return. This link describes how to fill in you VAT return http://www.businesslink.gov.uk/bdotg...mId=1073790790 I assume you are saying you should add bank interest to invoives (sales) in box 6. The guidance says total sales and also "zero rated and exempt supplies". The following link says what these are http://www.avnmembers.co.uk/knowledg...oandexempt.htm. Bank interest is NOT one of them.

I conclude therefore you ignore bank interest when calculating your VAT each quarter.

But I agree you consider it in your income when deciding if you can join the scheme or not!

Please do not Grrr at me [/denny]

I was only replying to a post which was quoting from the joining critera.

[Archangel]

Grrrr. The document you are quoting from is the criteria for JOINING the flat rate scheme it is NOT about how to fill in your VAT return. This link describes how to fill in you VAT return http://www.businesslink.gov.uk/bdotg...mId=1073790790 I assume you are saying you should add bank interest to invoives (sales) in box 6. The guidance says total sales and also "zero rated and exempt supplies". The following link says what these are http://www.avnmembers.co.uk/knowledg...oandexempt.htm. Bank interest is NOT one of them.

I conclude therefore you ignore bank interest when calculating your VAT each quarter.

But I agree you consider it in your income when deciding if you can join the scheme or not!

sorry to continue to argue, but HMRC quote (in the bit about joining the scheme)

"the value of any exempt supplies, such as rent, lottery commission or bank interest on a business account"

hence I think bank interest is an exempt supply. The other link you gave is not from the HMRC so is not necessarily complete (and does have "finance" as an exempt supply)

the actual legislation is here http://www.opsi.gov.uk/acts/acts1994...023_en_20#sch9

it clearly states in schedule 9, group 5, item 8, "the operation of any current, deposit or savings account" is an exempt supply. So SHOULD be included in turnover for flat rate VAT.

[d000hg]

You don't pay VAT on services that you supply to the US. It is hidden away somewhere in the HMRC website.

Are you supplying services?

I think so. Doesn't software development for my client count as a service?

[Ardesco]

I think so. Doesn't software development for my client count as a service?

Yup

There is a list somewhere on the HMRC site

[Lewis]

Please do not Grrr at me [/denny]

I was only replying to a post which was quoting from the joining critera.

It was a light hearted Grrr (and I admit the HMRC link is confusing)

But in all seriousness I am happy to follow the advice of my accountant and I also believe that what they are saying is correct. I'm not going to change my VAT returns. Do your accountants advise differently?

[ratewhore]

Can someone clarify if income I get from the US is something I'd have to pay VAT from, if I register from VAT? I've heard contradictory statements...

1)It's not eligible so if I register for VAT it makes no difference to my US clients.
2)I have to pay VAT on my US income, but since they don't have VAT in the US it would effectively mean a 17.5% increase in my charge as far as they're concerned.

Anyone able to clear this up, preferably backed up with some evidence?

How about you ask your accountant? They're much more qualified than we are on these boards (apart from the accountant's on these boards - obviously!!)...

[r0bly0ns]

sorry to continue to argue, but HMRC quote (in the bit about joining the scheme)

"the value of any exempt supplies, such as rent, lottery commission or bank interest on a business account"

hence I think bank interest is an exempt supply. The other link you gave is not from the HMRC so is not necessarily complete (and does have "finance" as an exempt supply)

the actual legislation is here http://www.opsi.gov.uk/acts/acts1994...023_en_20#sch9

it clearly states in schedule 9, group 5, item 8, "the operation of any current, deposit or savings account" is an exempt supply. So SHOULD be included in turnover for flat rate VAT.

I have highlighted the key wird there - turnover.

Turnover is used when assessing your eligiablity to join the FRS, it is not used on a VAT return.
Sales are used on a VAT return.

Turnover includes bank interest, sales does not.

[Archangel]

I have highlighted the key wird there - turnover.

Turnover is used when assessing your eligiablity to join the FRS, it is not used on a VAT return.
Sales are used on a VAT return.

Turnover includes bank interest, sales does not.

Not for flat rate VAT, it is turnover you use, I quote:

"The turnover to which you apply the flat rate is all that you receive including the VAT."

and

6.2 What must I include in my flat rate turnover?
Your flat rate turnover is all the supplies your business makes, including VAT. This means all of the following:

the VAT inclusive sales and takings for standard rate, zero rate and reduced rate supplies
the value of exempt supplies, such as rent or lottery commission. You can find out more about exempt income in Notice 700 The VAT Guide
supplies of capital expenditure goods, unless they are supplies on which VAT has to be calculated outside the flat rate scheme in accordance with paragraph 15.9 and
the value of any despatches to other Member States of the EC if you are making intra EC supplies. For details see Notice 725 The Single Market.
Note: As exempt and zero rate supplies are included in flat rate turnover you apply the flat rate percentage to the exempt and zero rate turnover. You may pay more VAT by being on the scheme if these supplies are a larger proportion of your business turnover than the average for your trade sector

[Lewis]

Not for flat rate VAT, it is turnover you use, I quote:

"The turnover to which you apply the flat rate is all that you receive including the VAT."

and

6.2 What must I include in my flat rate turnover?
Your flat rate turnover is all the supplies your business makes, including VAT. This means all of the following:

Your company has not supplied the Bank Interest to anyone. Honestly, you should speak to your accountant, but I suspect you don't actually have one, which is why you are in this situation. If I was you I would get one quickly, I am sure you can make an adjustment to your future VAT returns to remove the bank interest you have obviously included already. I don't really want to devote any more time to this, unless you are saying you are either (a) an accountant or (b) have been told this by your accountant, in which case I am prepared to consider it some more despite me being convinced you are wrong.

[Ardesco]

Your company has not supplied the Bank Interest to anyone. Honestly, you should speak to your accountant, but I suspect you don't actually have one, which is why you are in this situation. If I was you I would get one quickly, I am sure you can make an adjustment to your future VAT returns to remove the bank interest you have obviously included already. I don't really want to devote any more time to this, unless you are saying you are either (a) an accountant or (b) have been told this by your accountant, in which case I am prepared to consider it some more despite me being convinced you are wrong.

Just to echo this one, bank interest is definitely not something that you supply, therefore is not taken into account.