Flat rate vat and Disbursements

[Postforce]

Hi all
Can someone just answer this one please.

If you are registered for flat rate vat and you invoice something as a disbursement - do you have to count that amount as turnover which you pay the % on? It seems its going to hurt if you do as you are paying a % on a sum that you have charged no vat on!

Tks in advance

 

[winelight]

This is covered in VAT Notice 733. Section 6.4.

if you pay amounts to third parties as an agent and debit your client with the precise amounts paid out, you may be able to treat them as disbursements. If you are making such disbursements, then the money received for them is not part of your flat rate turnover.

But you have to jump through a lot of hoops before something qualifies as a disbursement for VAT purposes.

http://www.hmrc.gov.uk/vat/managing/charging/disbursements.htm#1

 

[spundry]

Don't quote me but I thought that you can actually charge VAT on top of disbursements (if you choose to) and therefore make extra income by paying over a smaller % of VAT to the taxman under flat rate scheme.

 

[winelight]

I see what you mean but this does not sound as if you have that option:

If you are making such disbursements, then the money received for them is not part of your flat rate turnover.

 

[Postforce]

Tks for your comments - its the old chestnut in the mailing industry of charging vat on postage. I wrote for a ruling but got a non-commital letter back just on the side that it could be invoiced as a disbursement - suddenly alarm bells rang - if I invoice £5000 of postage on a job as a disbursement but have to pay the flat % on it - i would lose on the job!