Dumb FRS question

[d000hg]

I'm new to FRS and just wanted to check, FRS VAT is charged on the gross income? i.e. if I bill a client £1000 + VAT@20%, under FRS I would pay 14.5% of £1200.

So for most purposes, a 14.5% FRS VAT rate is equivalent to saying I charge my client 20% and pay HMRC 17.4% of the net invoice amount?

[northernladuk]

The example here would indicate this is correct...

The VAT Flat Rate Scheme Explained

[ctdctd]

I'm new to FRS and just wanted to check, FRS VAT is charged on the gross income? i.e. if I bill a client £1000 + VAT@20%, under FRS I would pay 14.5% of £1200.

Correct - you make a slight profit if all you are charging for is your time.

Don't forget the rate you pay to HMRC is discounted by 1% in your first year.

[northernladuk]

Correct - you make a slight profit if all you are charging for is your time.

Don't forget the rate you pay to HMRC is discounted by 1% in your first year.

Only in the first year of VAT registration and bearing in mind the OP is a long time poster I am sure he has been VAT registered for over a year. He is only new to FRS, not VAT.

[d000hg]

Ta. I'd naively thought I simply paid 14.5% of net when setting money aside for HMRC and wondered why I was short a couple of £hundred in that pot.

[northernladuk]

Ta. I'd naively thought I simply paid 14.5% of net when setting money aside for HMRC and wondered why I was short a couple of £hundred in that pot.

That mean you have been declaring illegal dividends and paying yourself the VAT mans money?? Say hello to Mr Upton when you bump in to him

[Maslins]

Correct, FRS % payable on the gross.

I think many contractors misunderstand this with their "back of fag packet" calcs, so think the FRS is far better than it actually is.

[stek]

Dumb FRS question

As an aside question, while I'm still here in Ireland and not adding vat will I be better off deregistering from FRS?

Suppose only I can answer that, that's another job for weekend.

Not only that, Kayleigh by Marillion is on the airport coach stereo, thinking of you, MF...

PS - stereo! FFS! I am me dad...

[d000hg]

That mean you have been declaring illegal dividends and paying yourself the VAT mans money?? Say hello to Mr Upton when you bump in to him

Nope, it just means each month when I move the % of invoiced bills for CT+VAT to a separate account, I've been doing it slightly wrong since moving to FRS. No crisis, especially as I caught it 1st quarter (I check the VAT returns from my accountant match my own sums so when they don't match I know one of us is wrong!)