Flat rate VAT journal adjustment

Accounting
1

Hi everyone,

I am a newbie here. I do apologies if I am asking a stupid question.
As the topic stated, I understand if I pay flat rate VAT of 13.5%, quickfile will do the journal to adjust the sales automatically, however when I check the journal after submitted the VAT, the amount has been journaled doesn’t agree with 7.5% on sales for the sales adjustment.

Could anyone please help me on this?
Many thanks,
Jess

2

Hi Jess

Firstly, I’m assuming that you’ve set up the flat rate VAT in your account?

Secondly, if you’re trying to calculate it manually, it’s worth noting that it’s not calculated in the save way as standard VAT. We’ll use an example of a sale worth £1,000 net.

With standard VAT, you’d charge and pay 20%.
Charge: £1,200
Pay: £200

With the flat rate scheme, you’d charge 20% and pay your rate of 13.5%:
Charge: £1,200
Pay: £162.00 (13.5% of £1,200 rather than 13.5% of £1,000)

What you pay is 13.5% of the gross amount rather than the net amount

Here’s the full guide on the Gov UK website:
https://www.gov.uk/vat-flat-rate-scheme/how-much-you-pay

I hope that makes sense?