Flat rate VAT - cash accounting method?

I’m fairly new to using the flat rate scheme, and wonder if there might be a bug in the way quickfile is calculating my returns. I have an agreed rate of 13% (including first year discount). QuickFile’s VAT return functionality seems to apply this 13% to the net amount of the sales, rather than to the gross (VAT inclusive) amount as it should be. For example, if I billed £20k in a period and received £24k including VAT, I think the tax due under the FRS should be 13% of 24k, or £3,120. Instead, Quickfile came up with £2600 as the “Net VAT to be paid to Customs”.

Am I missing something, or is this a QuickFile problem?

You need to enter discounted Flat rate and also check Vat Filing Start Date. Are you doing vat return on cash or accrual basis?

I’m sorry – I don’t follow. I have a 14% rate, discounted to 13%, which is what I’ve entered.

If quickfile applies this to the net rather than the gross amount, should I have entered 13 * 1.2 = 15.6% in order for it to calculate correctly?

I’m doing a cash return as Quickfile wasn’t supporting accrual basis for FRS filings at the time I set it up (which is a shame, because I find doing things on a cash basis baffling)

You are correct VAT for flat rate is applied to the gross not the net, this is actually what’s happening. The confusion I think maybe that you have a large invoice with the two payments, once in the last quarter, one in this quarter. On cash accounting we calculate the VAT based on the dates and amounts of the payments, so that particular invoice was mostly paid and reconciled in the last VAT return.

I would recommend you download the backing calculations, this will break down the figure for you.

If you are doing cash basis then QF will multiply actual cash from sales with 13% not invoiced

Thank you both – you’re quite right. There was an unfortunate coincidence of amounts that led me to think it was calculating on the net rather than gross, but everything seems to be working fine.

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