2 important vat questions

[sosnazzy]

Me again,

I have two burning questions about vat that I would like your expertise on. I am on the Flat Rate Scheme (6.5%) and I'm preparing the books for this quarter.

(1) I know I can't reclaim vat on purchases, but how do I stand if I have to refund a transaction?

For example; I sell a watch for £120 total. Included in that price is the £20 (20%) vat I have to charge. 6.5% vat of £120 is £7.80 that I have to pay to HMRC for the transaction. However, what if I had to refund the transaction in full? Do I still pay the £7.80 or can I show the refund as a vat credit on my spreadsheet? Likewise, if I refunded half his money back, would I show a £3.90 vat credit on my spreadsheet?

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(2) With the Flat Rate Scheme, I obviously have to pay 6.5% on all UK sales. But I read that I have to pay the vat on sales to any EU countries. Is that right? Also, what about sales to countries outside the EU?


Thanks in advance. Sorry about the wall of text. I'm looking for a good business forum where I can ask such questions.

 

[David Griffiths]

1 Refunds can be deducted from sales and the flat rate applied to the net amount

2 If you are on the flat rate scheme you have to apply it to all business income. That includes overseas sales that might be zero rated under the normal scheme and even income that is exempt under the normal scheme

 

[sosnazzy]

1 Refunds can be deducted from sales and the flat rate applied to the net amount

2 If you are on the flat rate scheme you have to apply it to all business income. That includes overseas sales that might be zero rated under the normal scheme and even income that is exempt under the normal scheme

Thank you David A very concise answer - exactly what I was looking for.