Changing Nature of VAT Registration
Discussion
Currently registered for VAT on normal basis.
My company is a small business in the engineering sector therefore should be elligible for flat rate VAT at a rate lower than 17.5%.
Is it possible to change over or do I need to deregister for normal VAT then re-register for flat rate (I get the feeling as one would involve a click and the other copious form filling in its likely to be the latter!)
My company is a small business in the engineering sector therefore should be elligible for flat rate VAT at a rate lower than 17.5%.
Is it possible to change over or do I need to deregister for normal VAT then re-register for flat rate (I get the feeling as one would involve a click and the other copious form filling in its likely to be the latter!)
You just apply for the scheme under your current VAT number.
Just make sure that you really are better off under the scheme and that its implementation doesn't screw up your current accounting/book-keeping system.
Don't forget that the Flat Rate VAT percentage is calculated against the VAT Inclusive value of your sales.
Example:
Normal VAT
Sales Invoice - £100.00 plus VAT at 17.5% = £117.50
The VAT Payable is £17.50 less any VAT reclaimable on costs.
Flat Rate VAT
Sales Invoice - £100.00 plus VAT at 17.5% = £117.50
Flat Rate percentage (say) 11%
VAT Payable to HMRC is calculated as follows
£117.50 x 11% = £12.93
Just make sure that you really are better off under the scheme and that its implementation doesn't screw up your current accounting/book-keeping system.
Don't forget that the Flat Rate VAT percentage is calculated against the VAT Inclusive value of your sales.
Example:
Normal VAT
Sales Invoice - £100.00 plus VAT at 17.5% = £117.50
The VAT Payable is £17.50 less any VAT reclaimable on costs.
Flat Rate VAT
Sales Invoice - £100.00 plus VAT at 17.5% = £117.50
Flat Rate percentage (say) 11%
VAT Payable to HMRC is calculated as follows
£117.50 x 11% = £12.93
Cheers Eric, I shall jump on it poste haste.
It is worth it in my case as basically we have no VAT reclamation.
Monthly I invoice x hours at the agreed rate + VAT and pay the VAT man all the VAT.
From viewing other peoples transactions, I'm losing about 5% margin not being flat rate at the moment. (and to be honest, amazed at my own lethargy in chasing this up seeing as the difference would be immediate in my pocket and I've known about it since May!)
It is worth it in my case as basically we have no VAT reclamation.
Monthly I invoice x hours at the agreed rate + VAT and pay the VAT man all the VAT.
From viewing other peoples transactions, I'm losing about 5% margin not being flat rate at the moment. (and to be honest, amazed at my own lethargy in chasing this up seeing as the difference would be immediate in my pocket and I've known about it since May!)
Do you use a dedicated book-keeping software system - such as Sage or Quickbooks? If you do, just make sure that any postings you make are properly adjusted and calculated for the very different figures generated by the Flat Rate Scheme.
Also, be very wary when completing the actual VAT Return itself.
The important thing to remember is that you MUST NOT complete the boxes in accordance with the instructions given on the return. These instructions are INCORRECT for those using the Flat Rate Scheme.
The VAT authorities should really supply a special VAT Return for those on the Flat Rate Scheme as it is fundamentally different to "normal" VAT and the figures entered on the return are fundamentally different. However, they do not. which is downright digraceful, In my experience. EVERY Flat Rate Return I have seen completed by anyone who wasn't receiving guidance from an advisor has been wrong - without fail.
I really think that the scheme is fundamentally flawed. It wasn't designed to allow businesses to pay less VAT. It was designed to allow businesses to keep simpler records and make the returns easier to complete. The former happens because the Flat Rate percentages seem not to have any basis in reality. HMRC have not revealed how they came up with the percentages. My guess is that they were pulled out of thin air.
The scheme has achieved neither of the latter two objectives of simplifying accounts and record keeping (quite the opposite, in fact).
I am waiting for the Flat Rate Scheme to be axed or at least fundamentally reformed.
Also, be very wary when completing the actual VAT Return itself.
The important thing to remember is that you MUST NOT complete the boxes in accordance with the instructions given on the return. These instructions are INCORRECT for those using the Flat Rate Scheme.
The VAT authorities should really supply a special VAT Return for those on the Flat Rate Scheme as it is fundamentally different to "normal" VAT and the figures entered on the return are fundamentally different. However, they do not. which is downright digraceful, In my experience. EVERY Flat Rate Return I have seen completed by anyone who wasn't receiving guidance from an advisor has been wrong - without fail.
I really think that the scheme is fundamentally flawed. It wasn't designed to allow businesses to pay less VAT. It was designed to allow businesses to keep simpler records and make the returns easier to complete. The former happens because the Flat Rate percentages seem not to have any basis in reality. HMRC have not revealed how they came up with the percentages. My guess is that they were pulled out of thin air.
The scheme has achieved neither of the latter two objectives of simplifying accounts and record keeping (quite the opposite, in fact).
I am waiting for the Flat Rate Scheme to be axed or at least fundamentally reformed.
is there an online link on any HM&R site to this exact rule about reclaiming 100% vat on company property ?
someone i know runs a vat reg'd company and this should be usefull info to them. but they will only 'heed' it if it is from a trusted source.. i.e a government website
someone i know runs a vat reg'd company and this should be usefull info to them. but they will only 'heed' it if it is from a trusted source.. i.e a government website
Edited by SystemParanoia on Thursday 6th December 17:30
Eric, I work as a project manager in engineering. As such my accounts are very simple so I just use an all conquering excel sheet which my accountant checks the accuracy of quarterly.
Thats it done now. About 3mins on the phone and its set to go, just need to wait for confirmation of when it will be starting.
I was conscious of the return filling instructions inaccuracy problem regarding flat rate VAT (was quite impressed when the guy on the phone mentioned it though and reiterated to be careful since the form "contradicts itself" [exact words
])
Thats it done now. About 3mins on the phone and its set to go, just need to wait for confirmation of when it will be starting.
I was conscious of the return filling instructions inaccuracy problem regarding flat rate VAT (was quite impressed when the guy on the phone mentioned it though and reiterated to be careful since the form "contradicts itself" [exact words
])
I've been thinking ever since Flat Rate came out that I'd probably be better off but I just can't bring myself to give up one of the true perks of running a business - always looking at the ex VAT prices when buying stuff that can be put through the company and claiming the VAT back.
Yes, I know it's illogical as I'm probably worse off.
Yes, I know it's illogical as I'm probably worse off.
SystemParanoia said:
is there an online link on any HM&R site to this exact rule about reclaiming 100% vat on company property ?
someone i know runs a vat reg'd company and this should be usefull info to them. but they will only 'heed' it if it is from a trusted source.. i.e a government website
Try here (I Googled flat vat)someone i know runs a vat reg'd company and this should be usefull info to them. but they will only 'heed' it if it is from a trusted source.. i.e a government website
Edited by SystemParanoia on Thursday 6th December 17:30
http://customs.hmrc.gov.uk/channelsPortalWebApp/ch...
Only possible as long as you dont turnover more than 150k ...
And if you 'buy stuff' then you cant claim back the VAT unless it's over 2k, and then it's limited to capital purchases
Oh ... and it will take months to process ( currently taking average of 94 working days for registrations and 59 working days for deregistrations )
And if you 'buy stuff' then you cant claim back the VAT unless it's over 2k, and then it's limited to capital purchases
Oh ... and it will take months to process ( currently taking average of 94 working days for registrations and 59 working days for deregistrations )
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