Hi all,
I am a small plumbing company and operate under the flat rate scheme. I use QuickFile’s VAT system to do my quarterly VAT returns.
But with the new VAT reverse charge scheme, I will now have my VAT removed at source along with my CIS. How do I account for this on my invoices to show that the VAT has already been taken, so the QuickFile system won’t then automatically calculate my set flat rate percentage to pay to HMRC as well as the deduction at source?
Thanks in advance.
If you need to enable the CIS scheme on your account, you will first need to enable it in your settings. This will then give you the option to set it on your invoices
There’s more information on this here: Domestic Reverse Charge for CIS
You should also consider whether its beneficial to contiue on the FRS if you are now subject to reverse charge.
I saw this on the gov.uk website but I don’t really understand why? Would this mean I would still have to pay my set rate percentage as well as the already deducted 20% meaning I would be down a double VAT payment?
No, you won’t pay vat twice, not as a sub contractor.
Its just always best practise to way up benefits of frs whenever there’s a change in handling vat.
No - reverse charge supplies are excluded when calculating the flat rate turnover on which you pay your percentage. However if a significant proportion of your sales are reverse charged then you may be better off leaving FRS and switching to standard VAT since, while you’ll have to pay more vat to HMRC on your non-RC sales, you will be able to claim back the VAT you paid to suppliers on your purchases and overheads for all jobs including the RC ones.
If most or all of your jobs are now subject to reverse charge you may find this even means HMRC end up paying you each quarter rather than you paying them.
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