VAT return - I am just about to do the VAT return for one of my clients and bank interest received has appeared in the box 6 (sales) as I coded it as T2 (exempt) - is this the correct place for it to be in the VAT return? Thanks
Bank interest is a business receipt, and therefore should be included in Box 6. Unless it is very, very large in proportion to your taxable income there will be no effect on the actual VAT figures.
(I am assuming you do not use the Flat Rate Scheme, as then the income should be included in your calculation.)
Thanks, no it is not the FRS so in that case I will leave it as part of the Box 6 net sales figure, it seemed odd to me, but I agree it is income to the business and the figure is very small :)
Leshoward: In 2011 HMRC confirmed that all Flat Rate Scheme users could "exclude" interest from their flat rate turnover? Has this decision been changed since 2011?
Maxholt: This followed a Tribunal decision. The decision did seem odd to me, as the FRS applies to all business income; why should one income stream be excluded?
However, and I am correcting myself; the FRS Notice 733, para 6.3 allows bank interest to be excluded.
Yes it did follow a Tribunal decision - which resulted in simplification of the rules so that all users of the FRS could exclude interest from their flat rate turnover. Personally, I didn't find it 'odd' to allow such income to be excluded in this way - and sometimes a little simplification of the rules is not such a bad idea :)
