Switching from FRS to Standard VAT

[SouthernManc78]

I've just started to have the conversation with my accountant about switching off the Flat Rate VAT scheme and onto the Standard VAT way of doing things.

From what I've worked out the amount of money I would 'make' from staying in the FRS is so small it's not worth it so getting my accountant to confirm and let me know what's involved in switching.

Has anyone else recently made the switch in light of the changes coming in April that they'd like to share?

[SueEllen]

Nothing to see here. Inform HMRC then you are on standard rate.

[b r]

I've had my Accountant go over our books (this year and last) and he feels that we have enough relevant costs that we won't need to move off 14% (Business Consultancy).

[TheCyclingProgrammer]

Not made the switch yet but probably will be soon, pending final legislation confirmation.

If you've not been making much of a surplus on the FRS you might have been better off on the standard scheme anyway, depending on your levels of input VAT.

I'm still unsure whether I can switch mid-way through a VAT period, my accountant seems to think I can, so I'll probably have to use HMRC software to do my next VAT return as FreeAgent won't handle this.

[VectraMan]

I probably will; but there doesn't seem to be an online way of doing it which is a pain.

Doing it in the middle of the period just seems like making it hard for yourself.

Are there any issues around cash accounting? If you have an outstanding invoice on your FRS end date does that get counted at 14.5% FRS rate or does that get counted as not part of the FRS (i.e. the day that it's paid)?

[TheCyclingProgrammer]

I've had my Accountant go over our books (this year and last) and he feels that we have enough relevant costs that we won't need to move off 14% (Business Consultancy).

Can I ask out of interest what makes up the bulk of your costs? Other than occasional hardware (phone and iPad every couple of years, laptop every 3 years or so, none of which count) and office supplies I can't think of many goods I purchase regularly that would qualify.

[TheCyclingProgrammer]

I probably will; but there doesn't seem to be an online way of doing it which is a pain.

Doing it in the middle of the period just seems like making it hard for yourself.

Are there any issues around cash accounting? If you have an outstanding invoice on your FRS end date does that get counted at 14.5% FRS rate or does that get counted as not part of the FRS (i.e. the day that it's paid)?

Yup, its an old fashioned snail mail letter that has to be sent.

You're probably right re: changing mid-period though I don't think FreeAgent will be able to handle both percentages in a single period either (my next period is Feb - Apr so I'd have to account under the new percentage for April invoices). I don't know what the transition arrangement would be from FRS cash accounting (which is separate) to the standard cash accounting scheme.

If you're cash accounting I'd imagine if it gets paid after your end date it would be accounted for under the standard scheme. I think you can only start using cash accounting on the standard VAT scheme at the beginning of a period.

[SouthernManc78]

I've had my Accountant go over our books (this year and last) and he feels that we have enough relevant costs that we won't need to move off 14% (Business Consultancy).

I thought all were going up to 16.5% ? That's the impression I got from reading this article https://www.gov.uk/government/public...technical-note

[pr1]

I thought all were going up to 16.5% ? That's the impression I got from reading this article https://www.gov.uk/government/public...technical-note

[SueEllen]

I thought all were going up to 16.5% ? That's the impression I got from reading this article https://www.gov.uk/government/public...technical-note

Read the post properly and note the important two words "relevant expenses"