vat return

[vitorsilva05]

Hello I just wonder if someone could help me in this matter, my firm is registered for VAT, and someone told me that when I return the VAT I will pay just nine percent back to the tax man of the fifteen percent that I charge to my clients, because my firm is limited and is a transport company is any true on this, if there someone who can help me in this matter
thanks

[Richie N]

I'm no accountant but what VAT you charge, you are collecting it on behalf of the HMRC, it's not your money. So you charge 15%, you pay them 15%.
Any input vat is deducted from your output vat.

[David Griffiths]

The fact that your firm is limited is not relevant to the amount of VAT that you will pay.

Have you registered to use the VAT flat rate scheme? That is a simple scheme available to businesses with VATable turnover of £150,000 and total business income of £187,500. That means that you simply apply a flat rate of VAT to your gross income.

For transport companies the current rate is 8% and you would also get a 1% reduction if you are newly VAT registered. I don't know where the 9% figure came from, but I often find that when clients tell me that they have been advised by "someone" (or his close friend "someone up the pub" :) ) then "someone" frequently isn't up to date!

The flat rate is based on statistics collected by HMRC and is intended to make administration simpler not to save money for people on the scheme.

The alternative is that "someone" has a related business and has worked out over a period that his VAT payable on the normal basis is about 9/15 of his output tax - in other words the VAT that he can claim back is about 6/15 of his output tax. That's probably unlikely.

If you don't understand what you are doing then you should take proper advice because getting things wrong can be very expensive in terms of penalties, and can lead to a nasty bill. It can also mean that you are paying more VAT than you need, although it's a strange fact that most of the errors that I come across are the other way.

[vitorsilva05]

do you mean that from the 15% i charge to my costumers i only have to pay back 8% or that i only have to charge 8% to my costumers
thanks by your answers

[CassioAcc]

You must charge 15% to your customers. You can then claim back VAT on purchases and you pay the net over to the VAT man.

Take the advice from David and if you do not understand this get some professional help. It can be costly if you get it wrong.

[KM-Tiger]

You charge 15% to the customers, then either:

Hand that over to HMRC, less any input VAT you have paid, eg on fuel.

or

If you are on the flat rate scheme, you pay 8% to HMRC, but you do not deduct any input tax.

As said above it's vital to get this right and would strongly suggest you consult your accountant. Apart from possible penalties and bills, you also need to plan cash flow, as there will be a lump to pay out every 3 months, and there is no leeway on the due date.

[Williams lester]

Just to add, that if you opt for the flat rate scheme, the 8% you pay over is 8% of the gross invoice value (including the VAT charged). As others have said, I recommend you get an accountant now if you do not understand VAT.

[3pic]

For transport companies the current rate is 8% and you would also get a 1% reduction if you are newly VAT registered. I don't know where the 9% figure came from, but I often find that when clients tell me that they have been advised by "someone" (or his close friend "someone up the pub" :) ) then "someone" frequently isn't up to date!


I've not got my reference books with me but I suspect the Flat Rate for transport WS 9% when the VAT rate was 17.5% - most sectors on the flat rate scheme wee reduced by 0.5% or 1% to reflect the lower VAT rate - tat may be where the confusion is coming from.

If you are a transport company, I'd have thought the the FLat Rate scheme may not be such a good scheme to be on becuase either way you are charing your customers VAT and as a transport company I'd have thought the expenditure for the business would be high (repairs/maintenance of vans, fuel bills, etc) and so the Flat Rate scheme may not be good for you.

The Flat Rate scheme means you charge 15% to your customer but you only pay over say 8% to HMRc and you pocker the dfference BUT you annot reclaim any VAT your incur such as from fuel bills, repairs, etc. You HAVE to apply to go onto the flat rate scheme so you are either on it or you or not, you'll have correspondance confirming this as you have to fill in an extra form to use this scheme.

The normal scheme means you charge your customer 15% and you pay 15% over to HMRC but you can reclaim all your VAT you incur on your purchases (fuel, repairs, tyres, etc). No extra forms are required, you are automatically on the normal scheme unless you ask otherwise.