The thing to remember with the flat rate scheme is that you charge customers VAT at the normal rate, and it is the gross amount (referred to as the flat rate turnover) to which the flat rate is applied.
So if £100 is the gross value of the sale (net £83.33, VAT £16.67) - which sounds like it is since you say the client receives that much from the sale - then the second one is correct: £100 gross, with 7.5% applied to that to give the £7.50.
If you're saying the £100 received from a sale is the net amount, however, then the first one is correct, because here the gross amount is £120, so the 7.5% flat rate for that type of business is applied to the £120, giving £9.
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
This is the gross amount that is paid into paypal from an ebay site and is made up of alot of smaller sales. They don't charge customers a net fee plus vat and dont sell to vat registered businesses just members of the public.
Are you just looking at what is transferred and using this as the sales figure Sam? Or getting the full reports from ebay? As with the ebay clients Ive dealt with they have also paid for items via their paypal account and without the reports there is no way of knowing.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I have been through the Ebay sales reports and the majority of the income is generated from there and all of it is transferred to Paypal. I have been through the sales reports in Paypal and there are other sales from the website going in too. I was a bit concerned last night when the Ebay reports were different to Paypal but can see why now.
As for the purchases, transfers, fees etc in Paypal I always go through them thoroughly, mainly to prevent duplication but luckily the purchases are mostly large wholesale orders or couriers.
No, it's still the first approach: The turnover is gross (i.e. including VAT), and the flat rate applied to that.
However, you do need to account for the full amount of the sale, before Paypal and Ebay fees, etc, take their fees - those are costs and should be shown as such.
Something to bear in mind:
Ebay's fees attract VAT - and IIRC (from a very long time ago) they use the reverse charge scheme because they're elsewhere in Europe (probably IE, but I can't remember), so your client should have submitted their VAT registration number to them somewhere in the account settings. I've no idea how that works in conjunction with the flat rate scheme!
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
