UK Flat rate VAT scheme

[Maf. King]

On Thursday 27 January 2011 14:13:35 Tom wrote:
> On 27/01/2011 13:00, Maf. King wrote:
> > I've heard of the flat rate scheme, but don't know any of the details -
> > how does HMRC decide what you are supposed to pay?
> >
> > I tend to find that making GC record what actually happens is often
> > best....
>
> I think it is determined by the business trade sector, here is a list of
> the rates;
> http://vatreadyreckoner.hmrc.gov.uk/
>
> So the existing UK Vat accounts can be used to record the Input and
> Output VAT amounts as normal, but somehow I need to "reconcile" the
> collected/charged VAT with the money in my Current Account (and I need
> to zero the VAT accounts at each VAT quarter)
>
> So I need to run a job to calculate the right payment and make transfers
> to "VAT paid" and also returns the excess to the Current account... any
> ideas how to proceed with that?
>
> Thanks,
> Tom
>
> > Maf.

Hi Tom,

I've taken a quick look at that site, and gone through the ready reckoner, it 
seems to me that you don't have to do any accounting for VAT for this scheme 
to work.

You estimate your income, they decide the rate for the year and off you go, 
paying them (estimate x rate) /12 each month (or quarter etc.)

What you have spent as input tax doesn't seem to need to be reported, as that 
is factored in as an "industry average" in the rate calculation.

Is that more or less how it works in practice?  Do you actually need to 
separately record the VAT component of your inputs and outputs?

Maf.
(who is not an accountant)