VAT Flat rate scheme

[Kev Stephenson]

There's something I am not getting here...

 

With the VAT flat rate scheme, I thought you pay a percentage of your TURNOVER, 9% roughly for forestry.

 

If you are charging 17.5% ontop of your prices for VAT, there is a big defficite.

 

For example, if you put a bill out for 100k then when you add your VAT ontop it will be £117,500.00 inclusive.

 

So 9% of this would be £10575 which means you would make a profit of £6925 on the VAT alone for every 100k you invoice out.

 

Is this right or am I missing something?? Dosent seem logical that the government would let this happen as for every 100k you invoice out they would be loosing nearly 7k ??

Or am I being too cynical??

 

you charge 17.5%

you pay 9.5% PLUS the vat on all your purchases. It is estimated that this would equal near enough the 17.5%

 

If I understand it correctly you either do flat rate (and pay vat on purchases/expenses upto £xk) or do standard vat, i.e. claim all vat paid but pay the hmrc at 17.5%

[skyhuck]

I believe you can only be on the flat rate scheme if your turnover is under £150K.

[Highland Forestry]

Hmmm Ok.

 

I wonder if my accountant would agree to means teast last years accounts to work out if I would be better on the flat rate scheme.

I am hoping to make some machinery purchases this year so being able to claim the VAT back will be important.

[Highland Forestry]

I believe you can only be on the flat rate scheme if your turnover is under £150K.

 

I think we're just under that mark.

[skyhuck]

Hmmm Ok.

 

I wonder if my accountant would agree to means teast last years accounts to work out if I would be better on the flat rate scheme.

.

 

Thats what we did.

 

IMO, one of the advantages of the FR scheme is that you are not really able to make any errors in the calculations, if you have been claiming VAT back on something for a few years and they inspect you and say you were wrong, you will get a bill for back payment. When you are just paying a % of turnover there is much less chance of an error.

[skyhuck]

I think we're just under that mark.

 

So your already registered??

[Highland Forestry]

So your already registered??

 

I am already VAT registered, yep... have been for a good while now..

But we are on the conventional scheme.

 

I'm just trying to work out if I could save some money with the flat rate scheme.. cutting costs is all good at the moment

[skyhuck]

I am already VAT registered, yep... have been for a good while now..

But we are on the conventional scheme.

 

I'm just trying to work out if I could save some money with the flat rate scheme.. cutting costs is all good at the moment

 

If you are not far under the £150K turnover limit they may not let you go onto the FR scheme.

 

I seem to recall another AT member trying to register or FR and they were told they couldn't, the VAT man said the thought his turn over was greater than was being declared!!

 

It seemed very strange to me that they could say that and yet not pursue him for undeclared income??BUT thats what he said.

[Highland Forestry]

If you are not far under the £150K turnover limit they may not let you go onto the FR scheme.

 

I seem to recall another AT member trying to register or FR and they were told they couldn't, the VAT man said the thought his turn over was greater than was being declared!!

 

It seemed very strange to me that they could say that and yet not pursue him for undeclared income??BUT thats what he said.

 

Know what you mean... you would expect them to slap him under investigation..

 

Thankfully they couldnt do that with me as I dont do any cash work at all...absolutley everythingis through the books.

 

See what you mean about approaching the threshold though, I bet they would say no if they thought we would go over the 150k mark.

[nailer]

My turnover went above it last year, but as it turned out so has the threshold which is now about 225K (VAT inclusive turnover).

 

The change to 9.5%, from the previous 9% is crafty - after all we do to collect all that money, package it up into quarterley bundles and send it in to be wasted.