Originally posted by TheFaQQer
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VAT FRS new rate
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Originally posted by TestMangler View PostThis
Proper business can deal with it. It's only you lot that can't cause you seem to think the government was giving you some sort of FRS 'bonus'.
How often have we read moans about being "out of pocket" because the client will only reimburse net + VAT ?
That said, it is quite obviously a punitive tax grab targeted specifically at "us".Comment
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Originally posted by Contreras View Post+1.
How often have we read moans about being "out of pocket" because the client will only reimburse net + VAT ?
That said, it is quite obviously a punitive tax grab targeted specifically at "us".When freedom comes along, don't PISH in the water supply.....Comment
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Originally posted by Contreras View Post+1.
How often have we read moans about being "out of pocket" because the client will only reimburse net + VAT ?
That said, it is quite obviously a punitive tax grab targeted specifically at "us".merely at clientco for the entertainmentComment
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Originally posted by eek View PostTrust me we aren't the culprits here. They are a certain type of company designed to employ a couple of staff and make the most of the employer ni allowance with a vat reclaim add on.
HMRC likes FRS as it encourages people under the threshold to register. It also is easier to investigate as a simple check against bank statements confirms most of the return.
The issue was an agency (or multiple) setting up LTDs for their 'umbrella staff' and using FRS to make a few more beans. One instance had over 200 LTDs with 2 'employees' in each.See You Next TuesdayComment
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Originally posted by eek View PostTrust me we aren't the culprits here. They are a certain type of company designed to employ a couple of staff and make the most of the employer ni allowance with a vat reclaim add on.Comment
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I agree with the sentiment that FRS was too often viewed purely as 'free profit' ignoring its intended purpose. However the cynic in me thinks this is more than just unintended collateral damage.
What's the rationale in disallowing specific expenses, other than targeting contractors as a whole?
Could the issue not have been dealt with under existing VAT legislation (for close companies)?Comment
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Originally posted by TheCyclingProgrammer View PostYou're making the common mistake as looking at the bit that HMRC lets you keep on the FRS as a "reward". It was never intended to be that, it was always supposed to provide an indirect way of recovering of any VAT you've incurred on your expenses. It just so happened that if this surplus amount exceeded the amount of VAT you pay during the year you'd make a bit of profit.
The "surplus" amount that the new percentage gives you is simply not enough for most of us to recover the VAT on our costs so we're effectively having to charge VAT to clients whilst not being able to recover the VAT we pay. Its only £200 on £100k turnover which only allows for £1k in VATable expenses before you start losing out.
Examples with £100k net turnover and £10k in net VATable expenses:
Registered on standard scheme:
VAT charged: £20k
VAT paid: £2k
VAT paid to HMRC: £18k
Gross profit: £90k
Registered on FRS under new percentage:
VAT charged: £20k
VAT paid: £2k (not reclaimable)
VAT paid to HMRC: (16.5% * £120k) = £19.8k
Gross profit: £88.2k
Being on the FRS has made you £1800 worse off, because the amount of VAT you've paid exceeds the amount of VAT recoverable on the FRS.
On the standard scheme you will always recover the VAT you've paid, no more, no less.
You would be paying them to be on the FRS scheme, and not recovering anything.Comment
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Originally posted by FarmerPalmer View Postand if you have (for example) a £150K warchest, getting 1% interest, £1500, you have to pay 16.5% of that to HMRC under the FRS scheme, so another £247.50 to pay.
You would be paying them to be on the FRS scheme, and not recovering anything.Public Service Posting by the BBC - Bloggs Bulls**t Corp.
Officially CUK certified - Thick as f**k.Comment
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