I changed over to flat rate VAT and am sure I checked the VAT report before and it looked correct. I went in today to review the return and it appears it is suggesting I need to pay HMRC the full 20% not the 14.5% I expected. Something is wrong somewhere but I cannot see what it might be - any ideas appreciated.
It would appear that VAT return was submitted before selecting the ‘Flat Rate Scheme’ in the VAT settings, have you tried rolling back all returns and recreating them?
Ah so if I understand correctly you cannot switch methods when historic returns exist? Maybe I am understanding incorrectly but it seems odd that by ticking flat rate all it has done is ignore input costs resulting in the 20% Vat request. Just to clarify I only want the data from sept/oct/nov to be calculated at the 14.5% flat rate basis (current return which I am processing) - all data before that should be based on inputs and outputs.
I am not so keen to disrupt the old returns as they will not tie up with what I submitted?
Yes you can switch methods but you should always check the backing report as some manual adjustments may be required. Did you look at the backing report? I just checked now and all your VAT calcs seem to be pegged at 14.5%.
Thanks Glenn can I ask where I can see the 14.5% in action as it may make more sense then?
If I take an example from my ‘download calculations’ option I can list this example which does not make sense to me -
Gross Value incl VAT @ 20% = 1388.58
this makes the VAT element £231.43 (20% VAT charged)
The amount it is suggesting as reclaimable under the VATTOTAL field is £201.34
This to me is not 14.5% (which I would calculate to be £167.78) and neither is it the 20% listed above.
If I can get an idea what or where I am going wrong I might be able to correct it but right now all the calcs seem to be somewhere between the 2 values.
Looks correct to me:
(1388.58 / 100) * 14.5 = 201.34
It would be correct if we were looking at the NET value but we are looking at the GROSS inclusive of VAT invoice value! I am not sure how to correct this or how I went wrong? Unless I am mistaken I thought I would be due to Pay inland revenue 14.5% of the NET value, but maybe I am wrong in this assumption!?
Have a look here:
Flat Rate percentage is calculated from the gross VAT inclusive turnover.
Your flat rate turnover is all the supplies your business makes including all:
- VAT inclusive sales for standard rate, zero rate and reduced rate supplies
Yes you are correct and I do feel stupid now reading the details! Thanks for the patient replies as always.