VAT flat rate scheme - good option?

[luke warm]

This looks like a good option to me. It looks like you charge 17.5% VAT on services, and then give C&E 13%. Using the ready reckoner I can spend up to 8K on VATable goods andstill be ahead on the FRS. Have I got it all wrong?

Do others here use FRS?

Thanks

[planetit]

It is a pretty good scheme. The usual error people make is forgetting that you pay 13% (or whatever) on your VAT inclusive turnover.

[MrsGoof]

i use the scheme, money for nothing kind off

You charge 17.5% on your goods / services so 1£000 *1.175 = £1175

then you pay 13% (or 12% on the first year) VAT on that is £152.75 so you get to keep £22.25

only woth it if you dont have a lot of pruchases

[malvolio]

As long as you're not buying anything VATable, it's is a good move. Even then, you can get exemptions for purchases of single items over £2k, when the old rules apply.

[luke warm]

planetit & MG - i didn't realise that so thanks.

I don't see myself spending much on VATable things so think I'll go for it.

[boredsenseless]

Be aware that if you buy kit (i.e. a laptop and its value before VAT is below 2000) you can't claim back the VAT on it.

Taxman made a comment here a few weeks back that as a result of this anomaly it is cheaper to buy a 2100 (vat exclusive) laptop than a (1750 vat exclusive) or those sort of figures.

If you plan on using consultants or subbies be aware the 2000 threshold only applies to goods, it does not also apply to services bought so these guys would cost you the full whack of VAT and you can't reclaim it.

[Mikeeelawson]

What happens to the net difference

If you charge vat at 17.5% and pay the VAT at 13% is the difference seen as income and then subject to tax?

Mike

[ChrisC]

What about being license

I operate this method - I also resell licenses for IBM - usually well over 2k but sometimes under it too - what would I do there?

[handsfree]

Do courses count as goods or services?

Supposing I spent £3k on 5 day boot camp, would I be able to reclaim the VAT on it?

I'm also on the flat rate VAT scheme.

Cheers

[boredsenseless]

Supposing I spent £3k on 5 day boot camp, would I be able to reclaim the VAT on it?

I'm also on the flat rate VAT scheme.

Cheers

Depends on the invoice you receive. If its x per day then its a service. If its a fixed amount for a product (i.e. the manual and instruction) then you may be able to argue its goods.

However depending on how much you invoice it may still beneficial overall to be on the flat rate scheme and just absorb this VAT in the 4.5% you retain.