Fixed Rate Vat

[Waldorf]

Any accountant attempting to charge more for handling standard VAT are simply being greedy. This was standard before the introduction of Flat Rate VAT, I don't recall any accountants offering discounts if you went on FRV. You should oppose any attempt to pay more fees.

[SueEllen]

Tis I, Lucifer. How can you tell it's really me?

Say no more...

Ahh feck that means I will have to ask Amazon for VAT receipts.

[TheCyclingProgrammer]

I've recently been informed by my accountant that this isn't strictly true. If you have a receipt from a major uk retailer you can claim the VAT back without a VAT receipt but.

1. If investigated it may and probably will be challenged.
2. This can be mitigated by the argument that the retailer has obviously charged VAT and the claim is good. HMRC are very unlikely to challenge this explanation any further.

Yes, I believe I've read something similar before but for an easy life I would ensure I had a VAT receipt, especially if its a significant purchase.

[radish2008]

Remember, not having a valid VAT receipt/invoice doesn't mean it can't be put through the books if its a valid business or employee expense, it just means you can't reclaim the VAT element.

I've recently been informed by my accountant that this isn't strictly true. If you have a receipt from a major uk retailer you can claim the VAT back without a VAT receipt but.

1. If investigated it may and probably will be challenged.
2. This can be mitigated by the argument that the retailer has obviously charged VAT and the claim is good. HMRC are very unlikely to challenge this explanation any further.

[amanwhoisquiet]

Same from my accountants:

If you have been a user of the Flat Rate Scheme, have been VAT registered for more than one year and will be deemed a limited cost trader, leaving the scheme and accounting for VAT under the standard calculation method can produce a relatively insignificant reduction in VAT payable of between £50-£130 per annum (based on turnover of between £60k-£130K per annum and reclaiming input VAT on accountancy fees alone).

To reclaim input VAT on eligible purchases under this method you will be required to analyse and provide VAT receipts to support each purchase. This of course will require your additional time for potentially minimal benefit, dependent upon your level of expenditure eligible for reclaim. You may well decide to stay on our current arrangement, as the difference in VAT payable when using the standard rate method can be small - but of course it is for you to decide in regards to your own personal circumstances.

I feel like the wording is hinting that I should stay on FRS scheme here - for an easy life. They do mention that those figures are based on just accountancy fees alone, but I bet there's not many firms who actually only have those as VATable expenses. Me leaving the FRS might take me an extra quarter of an hour a month, but I expect for a large accountancy with several thousands of clients the increase in work would be more significant.

[TheCyclingProgrammer]

My point was that just claiming back the VAT from the accountants bill and ignoring all the other VAT bills would still save me money.

Yes, once the new rate kicks in that's probably the case for everyone.

On the old rate a contractor with £100k turnover might make about £2k in flat rate surplus - enough to cover the input VAT on net costs up to £10k.

On the new rate you'd only make about enough surplus to cover costs of up to £1k net, and most of us probably spend that much alone on accountants fees.

[BigRed]

My point was that just claiming back the VAT from the accountants bill and ignoring all the other VAT bills would still save me money.

[TheCyclingProgrammer]

wasn't trying to imply it was a big deal, just bigger-than-zero

Sure, just not sure there will necessarily be "more admin" unless you really want to go to the hassle of collecting VAT receipts for all your meals.

[pr1]

So perhaps not a big deal after all?

wasn't trying to imply it was a big deal, just bigger-than-zero

[TheCyclingProgrammer]

but if you claim an expense today, in order to claim the same expense tomorrow you'll need a VAT receipt (assuming it's VATable) - so unless you have no other VATable expenses other than your accountant, it will be more admin

Remember, not having a valid VAT receipt/invoice doesn't mean it can't be put through the books if its a valid business or employee expense, it just means you can't reclaim the VAT element.

I've been thinking about this a bit more and generally I'd say our expenses will fall into one of two categories:

1. Stuff that we'd normally get VAT invoices for anyway, usually electronically - accountancy fees, equipment or stationery purchases, anything bought online (usually) etc. This should be almost no extra admin other than making sure you keep a digital backup of any emailed invoice.

2. Stuff that you don't normally get VAT receipts for by default or if you do they need to be collected, kept or ideally scanned and kept digitally. I'd imagine this would mostly be any subsistence expensed as part of any business journey or while working at a temporary workplace (the travel would normally be zero rated). Its up to you whether you want to go to the hassle of asking for and collecting VAT receipts and reclaiming the VAT. You're probably not losing out much if you don't. Worth remembering that regardless of VAT, if you've been claiming for any subsistence you should have been keeping some form of receipt anyway (even if you previously had a P11D dispensation). All that's changed is if you want to reclaim the VAT you need to request a VAT receipt.

So perhaps not a big deal after all?

[pr1]

My accountant has sent me an email saying I might want to leave the fixed rate scheme. They go on to say that leaving would save me approx £120 just on their fees compared to staying in on the new rate but I might not want to due to the increased admin.

They seem to forget that just claiming back their fees and not bothering with anything else will save me money, that would be zero extra admin for me.

but if you claim an expense today, in order to claim the same expense tomorrow you'll need a VAT receipt (assuming it's VATable) - so unless you have no other VATable expenses other than your accountant, it will be more admin

[SueEllen]

Random thread about stuff we have been discussing since the autumn statement.

[nato]

[BigRed]

My accountant has sent me an email saying I might want to leave the fixed rate scheme. They go on to say that leaving would save me approx £120 just on their fees compared to staying in on the new rate but I might not want to due to the increased admin.

They seem to forget that just claiming back their fees and not bothering with anything else will save me money, that would be zero extra admin for me.