Hi,
I am about to submit my first VAT return using QF and I’m using the FRS of 14.5%. Just wanted some clarification on a couple of things:-
On the QF VAT sheet you submit say on Boxes 1, 3 & 5 should these be at the Standard Rate of 20% or the Flat Rate?
Example 1
1 VAT due on sales and other outputs 200
2 VAT due on EC acquisitions 0
3 Total VAT due 200
4 VAT reclaimed on purchases and other inputs 0
5 NET VAT to be paid to Customs 200
6 Flat rate turnover inc VAT 1200
7 Total value of purchases exc VAT 0
8 Total value of supplies to other EC states exc VAT 0
9 Total value of acquisitions from other EC states exc VAT 0
Example 2 with FRS (14.5%) already calculated
1 VAT due on sales and other outputs 145
2 VAT due on EC acquisitions 0
3 Total VAT due 145
4 VAT reclaimed on purchases and other inputs 0
5 NET VAT to be paid to Customs 145
6 Flat rate turnover inc VAT 1145
7 Total value of purchases exc VAT 0
8 Total value of supplies to other EC states exc VAT 0
9 Total value of acquisitions from other EC states exc. VAT 0
I wasn’t sure I just upload my bridging sheet with the standard 20% included and QF calculates (what I owe HMRC minus the 5.5%?.
Also, in box 6 is this the total sales including 20% VAT or as in my Example 2 when on the FRS you add the FRS value you pay to HMRC not what you charged the customer.
The reason I ask you this is because when I uploaded say my Example 1, QF displayed the total values in standard rate (20%) and I wasn’t sure basically do I load my returns with the flat rate values or load with standard and QF reduces the amount owed by 5.5%
I have 14.5% entered and saved in my QF VAT account settings.
Further, I only wish to use the FRS and not claim on any purchases and therefore pay HMRC via direct debit is the Accrual or Cash Accounting more suited my method explained.
Thanks Matthew, well you partially answered some of my questions.
One more if I may, Ill try and be more direct.
When using the FRS Box number 6 as below states, “Flat rate turnover inc VAT” does this mean Total Sales plus the Flat Rate percentage, in my case its 14.5%? not the standard 20%
It means the total flat rate sales including VAT - when you’re on flat rate it doesn’t affect what you put on the invoices you send to your customers, you still invoice them as net plus 20% VAT. The difference is only in how you declare it on your return.
Box 6 should be your total sales including VAT at 20% (or whatever rate was appropriate to each sale, if you sell a mixture of different things), but box 1 will only be 14.5% of that total - you keep the 2.17 percentage points difference between that and what you would have paid on standard VAT accounting but in return you can’t claim back what you paid on purchases.
Firstly thank you very much. Yes I understand this now that box 6 is at the standard. It was just the wording in this box which changes when you add your FRS in your settings that threw me.
I guess the subtle point I was making is that “turnover including VAT” isn’t necessarily exactly 20% on top of the total turnover excluding VAT, for two reasons. First and most obviously you might be selling different items at different rates (children’s vs adult clothes, for example), but even if every sale is at the same rate there will be rounding errors since the 20% is calculated and rounded to whole pence on each sale individually, and it’s the total of all those VAT-inclusive invoice totals that goes in box 6 on flat rate.
Your box 1 will then be 14.5% of that box 6 total.
(In normal VAT accounting where all your sales are at 20% VAT, you’d expect box 1 to be roughly 16-and-two-thirds % of the total VAT-inclusive turnover, so the difference for your flat rate is only two and a bit percentage points rather than 5.5)
Going back to your original examples, if you’ve got total VAT-inclusive sales of £1200 in box 6 then boxes 1, 3 and 5 would all be £174 (14.5% of 1200).