We are registered under the VAT Flat Rate Scheme. If we issue a Credit Note for a pending customer invoice, and that credit note also includes VAT, will it reduce the VAT payable under the Flat Rate Scheme?
Thank you in advance
Hello @ZionAccount
It would as the credit note would reduce your turnover.
The Flat Rate VAT scheme allows participating businesses to simplify their VAT accounting by only paying a reduced rate of VAT on their total sales without reclaiming VAT on purchases.
On the flat rate scheme you simply total up your VAT inclusive sales and credits (turnover) for a given period and then apply the flat rate VAT % at the point the return is generated.