VAT Flat Rate Considerations

1. Fixed Asset Value - Enter the Purchase Price Excluding VAT. This will help calculate the depreciation correctly on the P&L and reconcile with the Balance Sheet.

2. Profit & Loss Account

The following rows will be added to the Profit and Loss Account:-

Turnover VAT Flat Rate Adjustment

This is used to adjustment the VAT so that it reflects that VAT Paid and collected (eg. the Difference between the FLAT Rate and the standard rate changed)

How is "The Turnover Flat Rate Adjustment" calculated

a = Vat Charged on Invoices Issued  (not Invoices paid!)

Eg. £8333.33 * 20% = £1,666.66

 b = FlatRate Turnover * Flat Rate Percentage  (Note: Flat Rate Turnover is INCLUSIVE OF VAT and if  using cash accounting, then it's invoices paid and not invoices issued)

Eg. £10,000 * 14.5% = £1,450.00

Adjustment = a - b

Eg. £1,666.66 - 1450 = £216.66

Other Expenses VAT Flat Rate Adjustment

As the figures used in the P&L are excluding VAT and on a Flat Rat Scheme you are not claiming back an Adjustment is added for all VAT Paid on all  purchases < £2000 (VAT can be claimed on Purchases >= £2000)

If you don't, then the P&L will show Turnover without VAT (Eg. £250) and the Balance sheet will show Debtors including VAT (£300).

How is the "The Other Expenses Flat Rate Adjustment" calculated

a = VAT Charged on Purchases < £2000  (Including Asset Purchases)