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Post Info TOPIC: Flat rate scheme in the accounts
rachel_mclean


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Flat rate scheme in the accounts
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Hi, I feel a bit stupid asking this question (probably should know as I've dealt with it before years ago) I have a client who changed to the VAT flat rate scheme.

I don't actually know how to put this into the accounts, do I use the total income figures (including the flat rate vat) or the net of FRS vat income figure? and is it the gross expenses as they are not re-claiming the VAT on them?

I'm not actually doing the accounts again for months yet but would be good to know in advance what the hell I am talking about no

Thanks in advance

Rachel



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Rachel
MarkS


Expert

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To keep things simple if the FRS is 10% and the sale is £120 including VAT ie £100 + VAT = £120 then you would show £12 VAT liability and £108 in sales (£120 gross less the £12 VAT).  So double entry assuming sold on credit is

Dr Debtors £120

Cr Sales            £108

CR VAT             £12

As you dont claim VAT on the expenses under the FRS they are shown the accounts gross.



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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
Leger


Master Book-keeper

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Hi Rachel

Nothing wrong with Mark's answer but I find it easier to record the sales gross and put the VAT paid over as an expense.

 



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
rachel_mclean


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Date:
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Thank you very much



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Rachel
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