Hi there, I have just done my husband’s first VAT return on QuickFile for cash accounting flat rate and the VAT return is showing Flat Rate turnover inc VAT whereas the VAT should be calculated on turnover exc of VAT surely. What have I done wrong - please help he’s moaning!
You’ve done nothing wrong - on flat rate the FR turnover is supposed to be inclusive of VAT, and the flat rate percentage is calculated off that total.
So if you’re a limited cost trader with a flat rate of 16.5% then that’s only a tiny fraction less than the total you’d get on standard accounting (20% of net is 16.6667% of gross) and you may actually be better off financially to stop using flat rate.
If he wants the official line it’s section 6.2 of https://www.gov.uk/government/publications/vat-notice-733-flat-rate-scheme-for-small-businesses/vat-notice-733-flat-rate-scheme-for-small-businesses#section6
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