Flat Rate VAT on VT - The Book-keepers Forum (UK)

Lyndsey · Senior Member

Flat Rate VAT on VT

Leger · Master Book-keeper

Hi Lyndsey.

If it's a sole trader record sales and purchases as gross and don't use the VAT function in VT. Once you've worked out how much VAT is due, record this as either debit on income or create a new expenses records called Flat Rate VAT.

For Ltd Co's the rules have changed under FRS 102 and i understand that sales have to be recorded nett of VAT, so I will need to do some research on how best this should be recorded,

Jay · Senior Member

Good Morning,

I'm with Clients most of the day so may not have time to find the links. but yes it is possible to use VT and a VAT Flat Rate Scheme.

I am certain I responded to a similar query maybe a few years ago, and linked a post from Accounting Web describing the method.

If I get time today I will research it further but you may wish to search this site and Accounting Web yourself.

The guidance also lists the adjusted VAT rates you need to apply.

I hope this helps.

BW

Jay

Jay · Senior Member

Good Morning.

I was busy all day yesterday so did not have a chance to find the links.

I checked today and Accounting Web has changed, so I cant find the link though the search.

Basically, all expenses are put though as no Vat

All income is put through as a calculated VAT rate - not the flat rate

What is the flat rate for your client, who I am assuming is not a Ltd Company?

BW

Jay

VinceH · Expert

FWIW the instructions in VT suggest any of three methods:

1) Entering everything gross with VT itself not knowing about the VAT

2) Entering everything as you would on a regular VAT scheme

3) Entering only the sales with a VAT element

When I set up a client in it a year and a half back, I opted for #2. In each case you still have to calculate the correct return manually, but the advantage with #2 is that you can see what the VAT returns would look like on a normal scheme in order to compare, and therefore see if the client really should be on the flat rate scheme.

Lyndsey · Senior Member

Thanks everyone, I have done opt 2. I wanted to keep an eye on to make sure the fr vat is still better than normal VAT. I've made a spreadsheet so I can get reporting split monthly and worked out the VAT manually on there. I now need to work out how to reflect it in the system, but that can't be that hard...

Cheshire · Master Book-keeper

Is this the one www.accountingweb.co.uk/any-answers/flat-rate-vat-scheme-vt-software

Lyndsey · Senior Member

On a side note, I know there should be no "profit" from flat rate VAT scheme, however, there will always be a slight difference, how do you reflect this in your system to get the correct tax return at the end of the year.

1 - if everything is done gross, reduce the sales figure be the VAT paid

2 - if everything is done net of VAT, this should give us the amount which should have been paid under the normal system, however, what if there is a difference. Also, what about pre-reg claims which was in previous tax return gross, we have claimed back the VAT, should this be picked up the in tax figures? EG we should have paid £2300 VAT under the FR scheme (was a very similar figure under the normal VAT process), however we could claim back nearly that for pre-reg expenses i.e. equipment, office installation etc which meant the VAT paid was £25. Should this difference be reflecting in the normal tax return?

Thanks