| | UK Flat Rate VAT Scheme - Invoice Based |
| Description | The Flat Rate VAT scheme (FRS) offers small businesses an alternative to the normal transaction-based method of VAT accounting. Flat Rate VAT is calculated as a percentage of your total turnover. This percentage value appears in box 1 on your VAT Return.  NOTE: Under the Flat Rate Scheme, you can't normally claim back VAT you spend on purchases. See the section for how the VAT Return Calculates for more information.
For further information about VAT, refer to the HM Revenue & Customs (HMRC) website at www.hmrc.gov.uk |
| Resolution | The VAT ReturnIf you haven't already started your VAT Return, you can find out everything you need to know in our Help Centre.
How the VAT Return Calculates Most transactions can be processed using the usual nominal and tax codes. However, there is one exception: Exceptions for capital assets Under the Flat Rate Scheme, you can't normally claim back VAT you spend on purchases. However, for certain purchases of capital assets costing more than £2,000 including VAT, you may be able to claim back the VAT. To do this, when posting the purchase, use tax code T25. When selling an asset, whether you claimed back VAT when purchasing it or not defines how you Dispose of an asset when using a Flat Rate VAT scheme. How the Flat rate VAT is calculated The flat rate percentage is applied when you run your VAT Return. The VAT you pay to HMRC calculates as a percentage of your gross turnover, this includes all sales including those which are Zero Rated and Exempt. | Box | Details | Sales | Purchases | | 1 | VAT due under the flat rate scheme plus any VAT from the sale of capital goods on which you have claimed input tax separately while using the flat rate scheme | Turnover from box 6 x flat rate %
Plus VAT on sales of assets outside scheme (T12) | T15, T17, T18, T20 and T24 | | 2 | VAT on any goods purchased from other EC Member States. | N/A | T8 | | 3 | Total VAT due, therefore the total of boxes 1 and 2. | N/A | N/A | | 4 | Usually £0.00 unless if you make a single purchase of capital expenditure goods of more than £2000 in value (inc VAT). | N/A | VAT on purchase of assets outside scheme (T25) + VAT on T15, T17, T20 & T24 transactions. | | 5 | Net amount of VAT to be paid to HMRC or reclaimed by you. | N/A | N/A | | 6 | VAT inclusive turnover for period plus value of any sale of assets outside the scheme. | Turnover T0, T1 (Gross), T2, T4, T5, T15, T18 (Gross) Non turnover T20 and T22 Asset sales
Net value of sales of assets originally purchased outside of scheme (T25) | Non Turnover T23 and T24 | | 7 | Usually 0.00 unless you made a single purchase of capital expenditure goods costing more than £2,000 (including VAT) and you are claiming the input tax in box 4 or you have any EC Purchases. | N/A | T7, T8, T15, T16, T17, T20,T23 and T24
Plus Net value of purchase of assets outside scheme (T25) | | 8 | Total Value of EC sales, excluding VAT. | T4
Plus Net value of sales of assets outside of scheme | N/A | | 9 | Total Value of EC purchases, excluding VAT. | N/A | T7 and T8 | Confirm the figures on the VAT Return Once you have calculated your VAT Return, you can click the value you would like to see a breakdown of. If you'd like to see the included transaction then double-click the value. You can then use the reports to confirm the figures in each of the boxes on the VAT Return. View reports > | Report name | Report location | Figures to note | Letters for calculation | Customer Invoices (Detailed)
| Reconciliation reports > Reconciliation reports > Flat rate - invoice based > Customers. | Flat Rate Tax Total | A | | Gross Amount less any VAT with a T25 tax code | B | | Flat Rate Day Books:Customer Credits (Detailed) | Reconciliation reports > Reconciliation reports > Flat rate - invoice based > Customers. | Flat Rate Tax Total | C | | Gross Amount less any VAT with a T25 tax code | D | | Flat Rate Day Books: Supplier Invoices (Detailed) | Reconciliation reports > Reconciliation reports > Flat rate - invoice based > Suppliers. | Flat Rate Tax Total | E | | Net Amount for tax codes T7, T8, T20, T23, T24 and T25 | F | | Flat Rate Day Books: Supplier Credits (Detailed) | Reconciliation reports > Reconciliation reports > Flat rate - invoice based > Suppliers. | Flat Rate Tax Total | G | | Net Amount for tax codes T7, T8, T20, T23, T24 and T25 | H | | Flat Rate Day Books: Bank Receipts (Detailed) | Reconciliation reports > Reconciliation reports > Flat rate - invoice based > Bank. | Flat Rate Tax Total | I | | Gross Amount less any VAT with a T25 tax code | J | | Flat Rate Day Books: Cash Receipts (Detailed) | Reconciliation reports > Reconciliation reports > Flat rate - invoice based > Bank. | Flat Rate Tax Total | K | | Gross Amount less any VAT with a T25 tax code | L | | Flat Rate Day Books: Credit Card Receipts (Detailed) | Reconciliation reports > Reconciliation reports > Flat rate - invoice based > Bank. | Flat Rate Tax Total | M | | Gross Amount less any VAT with a T25 tax code | N | | Flat Rate Day Books: Bank Payments (Detailed) | Reconciliation reports > Reconciliation reports > Flat rate - invoice based > Bank. | Flat Rate Tax Total | O | | Net Amount for tax codes T7, T8, T20, T23, T24 and T25 | P | | Flat Rate Day Books: Cash Payments (Detailed) | Reconciliation reports > Reconciliation reports > Flat rate - invoice based > Bank. | Flat Rate Tax Total | Q | | Net Amount for tax codes T7, T8, T20, T23, T24 and T25 | R | | Flat Rate Day Books: Credit Card Payments (Detailed) | Reconciliation reports > Reconciliation reports > Flat rate - invoice based > Bank. | Flat Rate Tax Total | S | | Net Amount for tax codes T7, T8, T20, T23, T24 and T25 | T | | Flat Rate Day Books: Nominal Ledger | Reconciliation reports > Reconciliation reports > Flat rate - invoice based > Nominals. | Total Values of the Flat Rate Tax Column (Credit) | U | | Total Value of the Flat Rate VAT Column (Debit) | V | | Total of Credit column less any values posted to Sales tax (2200) or Purchase tax (2201) control. Excluding non-vatable and EC purchase tax codes. | W | | Total of Debit column for the following tax codes: T7, T8, T20, T23, T24, T25. | X | | Customer EC Sales Activity | Customers > Reports > EC Sales Reports | Total Debits less total Credits | Y | | IOSS Transactions (Detailed) | VAT > OSS IOSS transactions | The net element of the transactions for goods.
You must add the Net total for each tax code used for goods to get the full Net element.  CAUTION: There is an issue with this report when using Flat Rate VAT schemes. The SI's show as negative when they should be positive, and the SC's show as postive when they should be negative.
| IOSS | Click the relevant box below to see which reports you need to run to confirm the values are correct. Box 1 This figure represents the VAT due in this period on sales including capital items on which purchase tax has been reclaimed. Using the totals from the reports you've run, Box 1 = (A - C) + I + K + M + U Why the figures may not agree: - Manual adjustments may have been posted. To investigate this further click Make adjustments.
- A VAT element has been included in a sales transaction with a tax code that hasn't been included in the VAT Return.
- Different date ranges have been used when comparing the reports to the VAT Return.
- Unreconciled transactions from before the specified period have been included in the VAT Return, but not the Day Book reports.
- Reverse Charge VAT has been posted using Tax Code T20 or T24. This could affect purchase invoice, purchase credit, bank payment, visa payment or cash payment transactions.
Box 2 This figure represents the VAT due in this period on EC Acquisitions. The figure in Box 2 is the notional VAT calculated on T8 transactions when T8 is linked to T1. This figure is calculated by multiplying the value of your T8 transactions by the Standard rate of VAT.
NOTE: If you want a report to show these transactions with the notional VAT calculated, please contact Sage Technical Support. Box 3 This figure represents the total VAT due. Box 3 is the sum of Box 1 and Box 2. Box 4 This figure represents the VAT reclaimed in this period on purchases. Using the totals from the reports you've run, Box 4 = (E - G) + O + Q + S + V Why the figures may not agree: - Manual adjustments may have been posted. To investigate this further, click Make adjustments.
- A VAT element has been included in a purchase transaction with a tax code that hasn't been included in the VAT Return.
- Different date ranges have been used when comparing the reports to the VAT Return.
- Unreconciled transactions from before the specified period have been included in the VAT Return, but not the Day Book reports.
NOTE: When using the Flat Rate - Invoice Based VAT scheme, Box 4 figures don't include any notional vat as this can't be reclaimed. Box 5 This figure represents the net VAT to be paid to HMRC or reclaimed by you. Box 5 is the figure in Box 3 less the figure in Box 4. Box 6 This figure represents the total gross value of sales. Using the totals from the reports you've run, Box 6 = (B - D) + J + L + N + W + IOSS Why the figures may not agree: - Manual adjustments may have been posted. To investigate this further, click Make adjustments.
- Transactions on the reports use tax code that hasn't been included in the VAT Return.
- Different date ranges have been used when comparing the reports to the VAT Return.
- Unreconciled transactions from before the specified period have been included in the VAT Return, but not the Day Book reports.
Box 7 This figure represents the total gross value of purchases. Using the totals from the reports you've run, Box 7 = ( F - H) + P + R + T + X Why the figures may not agree: - Manual adjustments may have been posted. To investigate this further, click Make adjustments.
- Transactions on the reports use tax code that hasn't been included in the VAT Return.
- Different date ranges have been used when comparing the reports to the VAT Return.
- Unreconciled transactions from before the specified period have been included in the VAT Return, but not the Day Book reports.
Box 8 This figure represents the total value of EC sales. Using the totals from the reports you've run, Box 8 = Y Box 9 This figure represents the total value of EC purchases. The figure in Box 9 is equal to the total of all invoices less credits raised with an EC Purchase Tax Code, normally T7 and T8. NOTE: If you'd like a report to show these transactions with the notional VAT calculated, please contact Sage Technical Support. |
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