Flat rate scheme

You will have to calculate the FRS VAT liability manually and journal this into the control account (if you have posted your sales invoices as no VAT) or else journal the FRS "profit" out of the control account if you have posted the sales invoices as 17.5% VAT.

Assuming then that you have not been posting purchase invoices with VAT analysed out (unless they breach the £2,000 rule) then let's say that you have billed £1,000 + VAT in the quarter and so your Sales Tax Control stands at £175.

Let's assume that your flat rate is 12.5% discounted to 11.5%.

Your actual VAT liability should be £1,175 x 11.5% = £135.13

So you will need to Dr Sales Tax Control and Cr Sales (p+l) with £39.87 to reduce your sales tax control account to its true liability.

Not quite. The difference that you gain under this scheme is actually an income to the business, which you need to show.
You can do the following on Sage, which will produce a correct VAT return for you, which you can file online:
1. create a new customer called 'Flat Rate account'
2. create a new VAT adjustment nominal code (usually 4099)
3. amend the default supplier tax code to T9. All your supplier transactions should be entered using T9. All customer transactions/bank receipts still use the normal T codes.
4. Then you need to determine the total turnover for the period - there are some extra reports within Sage for this to make life easier - if you don't have them Sage tech support will email them to you.
5. post a customer credit all under the 'vat' column to customer 'Flat Rate account', code 4099, vat code T1, for the vat adjustment figure. This is the difference between what you would have paid under normal vat (let's say 5,000) , and what you have calculated you will pay from the percentage applied to your gross turnover (let's say 3,000) - ie in this example the difference is 2,000.
6. post a customer invoice to customer 'Flat Rate account', code 4099, for the same amount (2,000), all under the 'net' column, vat code T9.
7. post a journal - the original total vat due figure (5,000) is debited to 4099 under code T9, and credited to 4099 under code T1.
All this work produces a correct VAT return and leaves you with income in 4099, which is a P&L code.
Regards