Your purchases will be recorded as per the invoices that are given to you, and they will show the standard and zero rated items.
For your sales, you need to be able to record your standard and zero rated sales - ost people are able to press different buttons on their tills to be able to record this. The products not sold are stock and not wastage, unless you actually throw them away. These would then be allowed as an expense in the month.
HMRC also have a scheme called the Flat Rate scheme where all you need is your turnover for the period to which you then apply a fixed rate. It works well for some businesses and badly for others, but VAT is important, and the way you describe accounting for it would be business suicide.
-- Edited by Quentin Pain on Wednesday 18th of August 2010 09:32:37 PM
True it looks that applying for the Flat Rate will be a suicide. Eg Last months total purchases were £27.500.Only £700 worth of goods were at 17.5% rate. Our daily receipts give us the total sales ammount.(no VAT line) I take all the purchases for a month that are at 17.5% rate add 25% markup and thats how i account for VAT.Although it does not mean i sell all 100% of stock with VAT.
I wonder how other cash based business do this?
p.s. I read the information on the apportionment scheme from HMRC.Many Thanks to Back Office Group
