Reply to: Tax Tribunals : VAT Flat Rate Scheme and Bank Interest

[css_jay99]

Flat Rate vat which is worked out on Turnover which did include Bank Interest.

opps!

I have never included Bank interest as part of flat rate turnover .

Good thing HMRC lost ... thieving gits.

css_jay99

[Sockpuppet]

In that case, then what exactly is the tread about?.

I have never thought that bank Interest received have anything to do with VAT .....

css_jay99

Flat Rate vat which is worked out on Turnover which did include Bank Interest.

[css_jay99]

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

In that case, then what exactly is the tread about?.

I have never thought that bank Interest received have anything to do with VAT .....

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.

[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

[Olly]

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

[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..

[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?

[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 :-)

[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.

[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

[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?

[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

[minstrel]

HMRC Notice 733 has now been updated, so it is now definitely correct to exclude bank interest from flat rate turnover.

...
1.2 What has changed?
This revised notice replaces the April 2011 edition. The amendments reflect the withdrawal of the need to include bank interest in the flat rate turnover.
...

...
6.3 What income do I exclude from my flat rate turnover?
You exclude from your flat rate turnover:

■private income, for example income from shares
■bank interest
■the proceeds from the sale of goods you own but which have not been used in your business
■any sales of gold that are covered by the VAT Act, Section 55 - see Notice 701/21 Gold
■non-business income and any supplies outside the scope of UK VAT, and
■sales of capital expenditure goods on which you have claimed input tax.
...

[Scrag Meister]

Although it's worth noting that Notice 733, last updated in April 2011, still states that you should include it.

Nothing like a bit of consistency!

Interesting update, thanks.

So are you saying that this is only valid from now or can we make a retrospective claim?