Flat Rate VAT Q1

[l35kee]

Just out of interest can you reclaim the 20% on the FULL amount of the purchase or only on the proportion that goes over £2k ?

So if you're on the FRS and gonna be buying something (or things at the same time/same place) that comes to about £1600, it's a smart idea to add £400 worth of more stuff to your basket.

[BrilloPad]

Just out of interest can you reclaim the 20% on the FULL amount of the purchase or only on the proportion that goes over £2k ?

On the full amount.

[radish2008]

Yeah, they didn't put me on the FRS in my Q1 for that exact reason. I bought a lot of equipment including an expensive laptop. Worked out much better as I hadn't billed much by then. And remember the £2000 thing. If a single invoice is at least £2k you can reclaim the VAT even while on FRS.

Just out of interest can you reclaim the 20% on the FULL amount of the purchase or only on the proportion that goes over £2k ?

[TheCyclingProgrammer]

Unless I'm getting confused TCP isn't Le3ky saying he's done both calculations, one under standard VAT and one under FRS and the FRS one is £9.58 lower and therefore he's marginally better of on FRS at the moment?

Yes, you're right, I think I misread the original post.

The simplest way to think about it is if your FRS surplus (whatever you have left on top of your net turnover after paying your VAT bill) is less than your input VAT for the period, you'll be better off on the standard scheme.

[ContrataxLtd]

Yes.

Your FRS payment is £9.58 lower. But if you've had any costs, you would have paid input VAT which you cannot reclaim.

Your calculations show you have a surplus of £9.58 for the quarter on the FRS. If your input VAT is higher than this than you're actually worse off on the FRS.

Unless I'm getting confused TCP isn't Le3ky saying he's done both calculations, one under standard VAT and one under FRS and the FRS one is £9.58 lower and therefore he's marginally better of on FRS at the moment?

I've recorded all my expenses including the VAT element. FA has completed the VAT return for me based on not being on the FRS. So I know what I would have to pay if I was not on the scheme. Which is Output VAT minus Input VAT.

I've worked out the figure I will actually have to pay because I am on the FRS, which is 15.5% of my "total cost of sales plus Output VAT". That payment to HMRC is £9.58 lower than the "Output VAT minus Input VAT".

[TheCyclingProgrammer]

Not sure if I'm misunderstanding (still new-ish).

I've recorded all my expenses including the VAT element. FA has completed the VAT return for me based on not being on the FRS. So I know what I would have to pay if I was not on the scheme. Which is Output VAT minus Input VAT.

I've worked out the figure I will actually have to pay because I am on the FRS, which is 15.5% of my "total cost of sales plus Output VAT". That payment to HMRC is £9.58 lower than the "Output VAT minus Input VAT".

Am I missing an important piece?

Yes.

Your FRS payment is £9.58 lower. But if you've had any costs, you would have paid input VAT which you cannot reclaim.

Your calculations show you have a surplus of £9.58 for the quarter on the FRS. If your input VAT is higher than this than you're actually worse off on the FRS.

[l35kee]

Understood. However at 15.5% its not too bad. There again I think I will speak to my accountant about a couple of large purchases I made.

Yeah, they didn't put me on the FRS in my Q1 for that exact reason. I bought a lot of equipment including an expensive laptop. Worked out much better as I hadn't billed much by then. And remember the £2000 thing. If a single invoice is at least £2k you can reclaim the VAT even while on FRS.

[BrilloPad]

You can move off flat rate whenever (if you meant you only picked it because you didn't realise). Don't have to wait until year 2. I'll be moving over in Q3 assuming the Q2 figures show the same trend.

Understood. However at 15.5% its not too bad. There again I think I will speak to my accountant about a couple of large purchases I made.

[l35kee]

I'm talking about on the FRS. Have you taken into account the input VAT that you were unable to reclaim when comparing the two schemes?

Not sure if I'm misunderstanding (still new-ish).

I've recorded all my expenses including the VAT element. FA has completed the VAT return for me based on not being on the FRS. So I know what I would have to pay if I was not on the scheme. Which is Output VAT minus Input VAT.

I've worked out the figure I will actually have to pay because I am on the FRS, which is 15.5% of my "total cost of sales plus Output VAT". That payment to HMRC is £9.58 lower than the "Output VAT minus Input VAT".

Am I missing an important piece?

[TheCyclingProgrammer]

Yep (box 4 right?), that's included in the non flat-rate calculation.

I'm talking about on the FRS. Have you taken into account the input VAT that you were unable to reclaim when comparing the two schemes?

[l35kee]

I went flat rate for new limited. I was not aware of new legislation. After 1 year I will be moving off flat rate. At 16.5%(of total invoice) you are assumed to only be paying VAT at 0.2% of what you invoice.

You can move off flat rate whenever (if you meant you only picked it because you didn't realise). Don't have to wait until year 2. I'll be moving over in Q3 assuming the Q2 figures show the same trend.

[BrilloPad]

I went flat rate for new limited. I was not aware of new legislation. After 1 year I will be moving off flat rate. At 16.5%(of total invoice) you are assumed to only be paying VAT at 0.2% of what you invoice.

[l35kee]

Is that before or after accounting for any input VAT you've paid in that quarter?

Yep (box 4 right?), that's included in the non flat-rate calculation.

[TheCyclingProgrammer]

Having (attempted to) do the calculations on my first VAT return. It looks like staying on the flat rate gives me a surplus of £9.58 (hoorah!). If I didn't have the discount, I'd be looking at paying £278.42 more than if I wasn't on the flat rate

Is that before or after accounting for any input VAT you've paid in that quarter?

[l35kee]

So still being in my 1st year I get the 1% discount down to 15.5%.

Having (attempted to) do the calculations on my first VAT return. It looks like staying on the flat rate gives me a surplus of £9.58 (hoorah!). If I didn't have the discount, I'd be looking at paying £278.42 more than if I wasn't on the flat rate

Get the discount until Sept, so guess I'll be staying on it until then. I already document every expense with a receipt on FA anyway, is there any other overhead other than what I already do?

(Also, if it was still 13.5% I'd be looking at a surplus of £585.58 )