VAT FRS - Can someone check my maths for me please?

[TheCyclingProgrammer]

Ah right, thanks Clare. So, based on that, and assuming my maths/arithmetic is correct, by joining the VAT FRS, I'd be approximately £57pw better off based on a £300pd daily rate. This equates to £230 per month on a 4-week billing basis.

Doesn't sound like a lot, and what I'd like to know from people who actually do this is, is it a lot of extra paperwork? I'm aware of the importance of VAT. I think it needs to be paid every quarter, no mistakes. I do have an accountant by the way. If it's a lot of extra work, I think I'll leave it for now, at least until I have to register for VAT.

If it's like an extra one or two hours a month, then it might be worth it. So, is the extra administration overly onerous?

The admin overhead is next to nothing, it's quite straightforward. But remember that if you are on the FRS then you cannot claim input VAT back except for on capital purchases over £2k.

A lot of people see flat-rate scheme surplus as "extra money" but remember that a) you have to pay corporation tax on this income and b) the surplus is supposed to cover any input VAT costs you may incur over the year.

Only after accounting for the input VAT you've paid over the year and the corporation tax can you determine your net extra cash which might not be very much at all. If your input VAT over the year works out to more than what you are making in FRS surplus, then you are actually *worse* off and should be on the standard scheme.

Admittedly, for most contractors, input VAT should be relatively low over the course of the year so it might still be worth it (I am on the FRS myself) and you can still claim input VAT for your big capital expenses (subject to certain conditions).

[Wanderer]

Only after accounting for the input VAT you've paid over the year and the corporation tax can you determine your net extra cash which might not be very much at all. If your input VAT over the year works out to more than what you are making in FRS surplus, then you are actually *worse* off and should be on the standard scheme.

There is a useful Flat Rate VAT calculator here Bassetts - VAT Flat Rate Scheme Calculator.