I have a query relating to the difference in Sales at the year end, due to accounting for VAT on a Flat Rate % basis.
Example Sales Figures
Net VatGross
10,000 2,000 12,000
Flat Rate % of 10%
Therefore VAT paid to HMRC is £ 1,200.
My question is where does the £ 800 (£ 2,000 less £ 1,200) get posted at year end, as this is effectively a gain on using the FRS .
I assume the only place to post the additonal £ 800 is to Sales, but its my first FRS job and just want to check. Who said tax doesn't have to be taxing!!
Yes it should go to sales, but I would post it to a seperate sales account (outside the scope of VAT) to make sure it does not get included by accident in the future and more VAT is paid on it too.
I will take your advice and create two Sales Accounts, one that is for VAT Calculations and one for out of the scope Vat for the difference due to the Flat Rate Scheme.
