Those that moved off FRS

[TheCyclingProgrammer]

Ah ok.. so where does the VAT money come from? or does everything ultimately cancel itself out?

It's effectively a bookkeeping/reporting exercise in most cases (except for mostly exempt businesses who cannot reclaim VAT under the normal rules).

[BrilloPad]

It cancels out against one another. As effectively it goes in as a sale and then out again as a purchase, so the overall impact is NIL.

Ah ok.. so where does the VAT money come from? or does everything ultimately cancel itself out?

Except for the plebs who end up paying. As ever.

[Louisa@AardvarkAccounting]

It cancels out against one another. As effectively it goes in as a sale and then out again as a purchase, so the overall impact is NIL.

[pr1]

You are correct though it makes no difference to your VAT bill as the VAT is reclaimed under the reverse charge mechanism, even on the FRS.

Ah ok.. so where does the VAT money come from? or does everything ultimately cancel itself out?

[TheCyclingProgrammer]

Could you expand on this? Is this because they're providing it exc VAT because you gave them your VAT number?

AFAIK you should still be paying the VAT on it in your return as "EC Services" (freeagent term maybe)?
https://www.freeagent.com/support/kb...r-from-the-eu/

You are correct though it makes no difference to your VAT bill as the VAT is reclaimed under the reverse charge mechanism, even on the FRS.

[pr1]

my Office365 subscription (so zero VAT anyway)

Could you expand on this? Is this because they're providing it exc VAT because you gave them your VAT number?

AFAIK you should still be paying the VAT on it in your return as "EC Services" (freeagent term maybe)?
https://www.freeagent.com/support/kb...r-from-the-eu/

[SeanT]

If you don't get a vat invoice to cover the vat, you will just miss out on the vat claim.

If it's a sizeable transaction, you have their VAT number and details of what it was for, why should it be your problem. Yes, it's best to chase it up and get a VAT receipt retrospectively, but if this proves "hard", why should your business be out of pocket?? Case in point poxy online hotel bookings where the hotel takes your card payment at the desk and is clearly registered (based on how much they must turn over to continue to exist) and only passing some of this back to the convenience operator overseas.

[chopper]

I stayed on FRS because I'm in a contract local to where I live so no accommodation expenses, and I'm past the 24 month rule so no travel anyway (my bus ticket is zero VAT anyway).

My VAT 'surplus' in May was £18. My outgoings were my Office365 subscription (so zero VAT anyway), my hosting (Digital Ocean, so zero VAT), my mobile phone bill (about £26 inc VAT), my accountants bill (£114 inc VAT), plus some other non VATable stuff anyway. So it's probably neither here nor there. If my situation changes and I end up with more regular VATable costs, then I'll probably leave the FRS.

Obviously not as good as February's FRS surplus of nearly £300, but the FRS was intended to simplify VAT accounting, not to make big profits.

[Chart Accountancy]

I know many on here intended switching to 'full VAT' when the FRS % changed to a 'one-size-fits-all' rate of 16.5%.
I didn't; I stayed on FRS [less beneficial these days I know], but was curious to know how those who did switch have found it in comparison.

Is it a 'pain in the A' [paperwork, calculations, etc.], or has the transition gone OK without any worries? Do feel better off having switched, or do you have regrets? Not a survey obviously, but just curious tbh as it's Friday afternoon...

If you use accounting software such as Xero or FreeAgent, you should not notice the difference. You will just have to enter the VAT amount per your receipts in the software. If you don't get a vat invoice to cover the vat, you will just miss out on the vat claim. It is piece of mind to be on the standard scheme. If you need to make a bigger purchase, you will know that you can claim the vat. On the FRS you can also claim vat for capital items but you need to spend over £2k.

[SueEllen]

As Sue Ellen points out, often for smaller purchases you won't get a formal VAT receipt unless you specifically ask for one...and doing so typically means waiting for a manager to come out, grumble lots, before cobbling something together.

Actually it was a larger purchase I had an issue getting a receipt for. All the small suppliers were happy when asked to provide a receipt and some of the delay was due to them being on a different time zone.

[TheCyclingProgrammer]

Painless for me, other than having to split my FreeAgent VAT periods and file a combined return via the HMRC website.

[Maslins]

Our clients have been give or take 50:50 leave FRS vs stay. Virtually all staying on it will be worse off, know that, but feel it'll only be by a modest sum and they'd prefer that rather than have to check every business purchase they make to see whether it was VATable or not and ensure they enter correctly onto FreeAgent.

It's not difficult, but can be a pain, especially if you do want to do it for every transaction. As Sue Ellen points out, often for smaller purchases you won't get a formal VAT receipt unless you specifically ask for one...and doing so typically means waiting for a manager to come out, grumble lots, before cobbling something together.

[SueEllen]

The biggest hassle for me was asking retailers for VAT invoices/receipts. Out of the five I had to ask four took 48 hours max to provide them. The fifth I had a one month argument before they relented and just paid the VAT back to me so I could forward it to HMRC. Funnily enough because I knew I had changed schemes I asked them as soon as I got the goods.

[Pherlopolus]

I find it fairly painless. I only reclaim big ticket items like hotels though rather than all the small stuff.

It's an extra box to fill in for each VAT transaction which with NW is no problem, and more than offset due to spending between 250-400 a week on hotels, and it automatically doing the VAT on the mileage claims too.

[SteelyDan]

I know many on here intended switching to 'full VAT' when the FRS % changed to a 'one-size-fits-all' rate of 16.5%.
I didn't; I stayed on FRS [less beneficial these days I know], but was curious to know how those who did switch have found it in comparison.

Is it a 'pain in the A' [paperwork, calculations, etc.], or has the transition gone OK without any worries? Do feel better off having switched, or do you have regrets? Not a survey obviously, but just curious tbh as it's Friday afternoon...