Autumn Statement 2016

[riffpie]

but isn't leasing accounted for as a service then rather than goods, so still wouldn't count for the new FRS rules

Honestly I have no idea. This is all very vague. It's all very "unless you're manufacturing things or have a shop, you don't count as a real business".

[TheCyclingProgrammer]

I believe you have spectacularly missed the point, lets consider a £600 day rate, certainly not unusual in the city .

HMRC will actually collect less of something that is non refundable to the businesses involved, as they are zero VAT rated, that's the funny bit

Example for a day, £600 PD.

At 20% Rate and on FRS
£600 PD
£120 VAT
£720 Invoice Total

14.5% Invoice Total to HMRC = £104.40

At 16.5% and FRS
£600 PD
£99 VAT
£699 Invoice Total

14.5% Invoice Total to HMRC = £101.35

I must be missing the point too - where is the £99 VAT coming from? The invoice total in both cases would surely be £720?

[TheCyclingProgrammer]

Honestly I have no idea. This is all very vague. It's all very "unless you're manufacturing things or have a shop, you don't count as a real business".

Nail. Hit. Head.

[MrMarkyMark]

I must be missing the point too - where is the £99 VAT coming from? The invoice total in both cases would surely be £720?

Wouldn't we be charging 16.5% under the new rules?

[riffpie]

Wouldn't we be charging 16.5% under the new rules?

Charging? No, we'll be charging 20% since that's what VAT is.

[MrMarkyMark]

Charging? No, we'll be charging 20% since that's what VAT is.

Double Doh!!!! whooosh.

Got it now, thanks

So, the thing they introduced to simplify VAT, they effectively want to take away, I should have known

[Waldorf]

The effective abolition of flat rate vat for contractors is the least of our problems. I think it is much more significant that another consultation is on its way that will look at various remuneration models, the aim seems to be to equalise the rates of tax, whatever method you are paid.

The other is the behind the scenes move to align tax and NIC rules, a probable precursor to a full merger of NIC and income tax.

The next Budget will be interesting.

[PurpleGorilla]

Autumn Statement 2016

£600/day + VAT = £720 * 14.5%FRS = £104.5 to HMRC but * 16.5%FRS = £118.5 to HMRC

[TheCyclingProgrammer]

Wouldn't we be charging 16.5% under the new rules?

No, we charge 20%. The FRS is what we pass over to HMRC (on the gross).

[TheCyclingProgrammer]

£600/day + VAT = £720 * 14.5%FRS = £104.5 to HMRC but * 16.5%FRS = £118.5 to HMRC

And that £10 inc. VAT you just spent on lunch has wiped out your flat-rate surplus for the day.