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,
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)
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.
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.