Tax Tribunals : VAT Flat Rate Scheme and Bank Interest

[Clare@InTouch]

I know we've already seen that HMRC have updated their VAT notes re flat rate and bank interest, but for anyone with any doubts left they've issued a brief to confirm no VAT is due on bank interest under FRS:

HM Revenue & Customs

[maverick]

So to sum up, no bank interest on VAT return to be included anymore.

To reclaim the VAT paid on interest for previous returns we can adjust our next return or is it going to more complicated than that?

[Lumiere]

[*]disbursements - costs you pass on to your clients that meet the necessary VAT conditions

Does it include travel expenses like hotels and flights if I charge it to the client in a separate invoice line, e.g.:

Consultancy services £8000 (vat - £1600)
Travel expenses £2000 (vat - £400)
Sub-total £10000
VAT £2000
Total £12000

Do I have to return my flat % based on £2000 (total) or £1600 (services only) ?

I just read somewhere that if you use a sub-contractor and it goes on your invoice to the end client you don't have to return vat for "his part" of the invoice ..thought the same might apply to travel exp

[Craig@Clarity]

Does it include travel expenses like hotels and flights if I charge it to the client in a separate invoice line, e.g.:

Consultancy services £8000 (vat - £1600)
Travel expenses £2000 (vat - £400)
Sub-total £10000
VAT £2000
Total £12000

Do I have to return my flat % based on £2000 (total) or £1600 (services only) ?

I just read somewhere that if you use a sub-contractor and it goes on your invoice to the end client you don't have to return vat for "his part" of the invoice ..thought the same might apply to travel exp

What you've detailed above is effectively "expenses recharged" to your client rather than a disbursement. In your example, it is included as part of your turnover figure for FR calculation.

[ctdctd]

So to sum up, no bank interest on VAT return to be included anymore.

To reclaim the VAT paid on interest for previous returns we can adjust our next return or is it going to more complicated than that?

I've adjusted my latest return to get back the 40 quid - boooooommmmmed :-)

[Lumiere]

I've adjusted my latest return to get back the 40 quid - boooooommmmmed :-)

Did you also reduce the turnover figure or just adjusted the total vat due?

[richy]

Did you also reduce the turnover figure or just adjusted the total vat due?

That is my question too!

Also, can I amend for the last 4 years? No need to re-file any corporation tax return or stuff with companies house? I'm not bothered about claiming that back, just the VAT..

[Olly]

my accountant said to reduce turnover figure (as a one off) accordingly

[css_jay99]

OK,

so can I confirm that interest received (from bank deposit ) should not be included in calculations to arrive at corp tax figure if running a Flat Rate scheme?


css_jay99

[Clare@InTouch]

OK,

so can I confirm that interest received (from bank deposit ) should not be included in calculations to arrive at corp tax figure if running a Flat Rate scheme?


css_jay99

Not quite. Bank interest can be ignored in your flat rate VAT calculations. It's still income for CT purposes though.