• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

Flat rate scheme

Collapse
X
  •  
  • Filter
  • Time
  • Show
Clear All
new posts

    Flat rate scheme

    Hi all. Humour me, this is going to seem obvious to many of you, but I just want to clarify something in my mind.

    Let's say as an example, I bill £1000, plus the VAT so the total amount billed is £1175.

    I think the VAT I pay back to HMRC is at 12% (my company is in first year of IT contracting). Should the amount payable be 12% of £1000, or 12% of £1175?

    The reason I ask is that I assume that it should be the former, whereas my accounts seem to show that I have paid the latter!

    Thanks...

    #2
    Originally posted by Gros View Post
    Hi all. Humour me, this is going to seem obvious to many of you, but I just want to clarify something in my mind.

    Let's say as an example, I bill £1000, plus the VAT so the total amount billed is £1175.

    I think the VAT I pay back to HMRC is at 12% (my company is in first year of IT contracting). Should the amount payable be 12% of £1000, or 12% of £1175?

    The reason I ask is that I assume that it should be the former, whereas my accounts seem to show that I have paid the latter!

    Thanks...
    Your accounts are right, you are not.

    hth

    You have to apply the flat rate percentage to the gross invoiced amount including the VAT. So you don't get to keep 5.5%. It is more like 3.5%. And you have to pay corporation tax on that too.

    When I say you, I mean your company, obviously.
    Last edited by Gonzo; 1 June 2008, 21:29. Reason: Being a little more helpful.

    Comment


      #3
      Super, thanks Gonzo, that does indeed help.

      Comment


        #4
        Gros

        Don't forget you get a 1% discount in your first year.

        Cheers.

        Comment


          #5
          12% for an IT Contractor is including the 12% just remembered to change mine to 13%

          Comment

          Working...
          X