Hi, I just switched from Standard Rate to Flat Rate VAT scheme in the middle of a quarter without realizing the difficulties involved.
I saw in one of the Knowledge Base articles that there is no clear setting to change the VAT scheme mid-quarter. Is there any practical way to fix this with a Journal? Or can I simply make a return for the month of June (Standard VAT), then another one for July-August (Flat Rate VAT) then when filing the actual return on HMRC platform using both Quickfile returns to sum each boxes and find the amount to use in the whole Jun-Aug return?
I normally file Dec-Feb, Mar-May, Jun-Aug, Sep-Nov. The letter I received from HMRC says that the Flat Rate accounting will start on the 01/07/2020, so in the middle of the Jun-Aug quarter.
Let me know if you have any tips on how to do this on Quickfile, thanks!
Sorry, I can’t help on that one. I would have thought the easiest way would be to file a separate return with HMRC for the single month you were on standard rate but I’m not an accountant so I don’t know whether this is possible. When I was on FR a few years ago the rules were that you had to start or finish in line with the normal VAT return period which of course made it a lot easier.
Hope someone else can give you a more helpful answer
Quickfile can’t handle a change in vat schemes mid way through a vat return period so you will need to make an adjustment to the vat return before submission. If you’ve changed the settings to the flat rate scheme then quickfile will remove some of the sales vat and place it in to the sales nominal, using the flat rate adjustment nominal.
You will need to work out what amount of net sales and sales vat should be treated as normal vat and add those figures back to the vat return as an adjustment.
You will also need to calculate the net purcahases and purchase vat for the old vat scheme period and again include those figures as an adjustment in the vat return.
As an example if you had sales Inc vat of 240 but 120 of that was the old scheme and the other is a flat rate of 10% quickfile would generate a vat return showing sales vat as 24. And net sales as 240 (under the flat rate scheme) You’d need to make an adjustment so sales vat was actually 32 (120 @ 10% and 120 @ 20%) you’d also need to adjust the net sales box from 240 to 220. (120 flat rate + 100 net sales on old scheme)
Then you’d add the net purchases and purcahase vat that you calculated should be included from the old vat scheme.
Remember, flat rate scheme will display net sales on the vat return as gross sales Inc vat, and the vat due as being a percentage of it. Whereas the normal vat method, will show net sales Excl vat and the vat amount being the actual vat charged on the sales. So try not to confuse the two.
