VAT on VAT

Support
1

Hi,
This is my first time using Quickfile. I have managed to use this for making invoices and also made a cis account for cis deductions but when I go to the VAT return page, box 1 VAT due, calculated value. It seems to VAT on invoices including VAT. In other words putting VAT on VAT.

Thanks
Tony

2

If you’re seeing the VAT inclusive value in box 6 then that suggests you’ve enabled the flat rate option. Check your VAT settings in QuickFile.

3

Hi,
Thanks for replying. Yes, I am under the flat rate scheme and yes, I have flat rate switched on at VAT settings and also yes, on the VAT return page, box 6 is automatically calculated.

So box 6 calculated the total of my invoices including VAT @ 20 % correctly
but box 1 is calculating the flat rate on box 6. So flat rate times the (invoice + VAT @ 20%)

4

Yes, that’s how the flat rate scheme is supposed to work. You pay a flat rate percentage of your VAT inclusive turnover which is lower than the 16.67% you would normally pay (net+20% means that the VAT amount is 16.67% of the overall total), in return for not reclaiming the VAT you paid on your purchases.

5

Thanks for the reply,
I am actually getting a figure higher than that.
If I invoiced work carried out ÂŁ1000 + VAT ÂŁ200 then on the VAT return page
it should say VAT due ÂŁ165 but
instead it is saying VAT due ÂŁ198

I used to do this manually in the boxs when online directly with HMRC and it was always ok.

6

What is your flat rate percentage? £198 out of £1200 is correct if you’re a “limited cost trader” on 16.5% - if you do indeed fall into this category then you’d almost certainly save money by leaving the FRS and claiming back your purchase VAT instead.

As I said above, I’d you weren’t on flat rate then you’d be paying HMRC one sixth (16.67%) of that £1200 as sales VAT but you’d also be entitled to deduct any VAT you had paid to suppliers.

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7

£165 would be 13.75% and there isn’t a flat rate of 13.75%. I suspect you’re on 16.5% but working it out based on the net amount of £1,000. As @ian_roberts says, VAT on the flat rate scheme is calculated as your flat rate percentage multiplies by your VAT-inclusive turnover i.e. the £1,200 above. I agree that if you are on 16.5% you’d almost certainly be better off on the standard scheme, unless all your supplies have no VAT on them!

8

Thank you very much ian_roberts & cbstephensaca for your help, confirmation and patience. I appreciate it.

Tony

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9

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