Flat Rate VAT and P&L Report

Accounting
1

I am trying to understand the flat rate VAT and its effect on the P&L. I can see that my invoices show standard rate of 20% and that my settings are flat rate at 11%. I get the VAT return and can see how that is calculated.

The bit that I don’t understand is the P&L. If my sales are £10k for the month, my VAT liability is £1100. But my P&L revenue only shows £8k revenue (10k-20%), not £8900 (10k - 1100). So my P&L is wrong?

I can see the help examples on the journals but when I look at previous P&L reports prior to creating a VAT return I still see 20% revenue taken off and not 11%.

What am I missing,

Thanks Rich

2

On Flat Rate, the VAT on the P&L is initially calculated as per the rate on the invoice (typically 20%). When the VAT return is submitted the system journals in the difference between your flat rate and the standard rate.

Flat Rate Adjustments (Nominal Account 4999)

3

Thanks Glen,

As 4999 has no transactions I assume that Journal has not been created following the last creation of the VAT return.

So I can adjust it manually and see what I did wrong when I create the next VAT return.

Thanks Rich

4

I believe it has been created, I can see a DR of 242.27 made on 4999 on the 28th February 2015. You may need to change your date range on the chart of accounts.