self employed accounts/VAT

[zeus2009]

I have a family client who I am doing accounts for. The client is set up on one of these VAT schemes where you calculate a set % of sales revenue. So it doesn't take into account the purchases.
When putting the P&L together, how do I account for this? Do I show the purchases on the cost accounts including VAT element? The sales including VAT?
Is anyone able to give me the correct double-entry here?

 

[Blackberry]

look here for details about the flat rate scheme

http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm

 

[zeus2009]

Thank you for this.

So is the double entry as follows:

Cr sales 115%
Dr Debtors 115%

Dr Purchase 115%
Cr Creditor Control 115%

Cr Bank - with VAT calculated on flat rate scheme
Dr Other Income??

 

[MyAccountantOnline]

Thank you for this.

So is the double entry as follows:

Cr sales 115%
Dr Debtors 115%

Dr Purchase 115%
Cr Creditor Control 115%

Cr Bank - with VAT calculated on flat rate scheme
Dr Other Income??

No it isnt - what is the flat rate % you are using?

All you need to do is one entry VAT and sales.

 

[zeus2009]

Hi Nicola

It is 7.5% being used.

Can you just clarify the entries?

 

[sheelagh]

When using the flat rate scheme, you don't need to account for VAT on inputs (except for high value fixed assets). So purchases are all
DR Gross invoice value. This might not be the same as your sugestion of purchases x 115%.
If using bookkeeping software, sales are generally recorded with VAT at the standard rate.
Calculate the Flat Rate VAT liability ie 7.5% of gross taxable income.
The adjustment will be
DR VAT liability
CR Other income
The value of the above journal being VAT charged on sales (output VAT) less FRS VAT liability

 

[weebly_one]

If you are using Sage I have a couple of fact sheets on diong flat rate scheme on Sage - pm me your email address if you would ike them.

 

[David Griffiths]

Show all income and expenditure at the full gross amount.

You can either debit the VAT paid to sales, or show it as a separate expense.

Simple!

Don't forget that the flat rate VAT is applied to all business income, including interest and other exempt income.

Not so simple!

 

[RobBellAutus]

If you are still not clear, PM me your email address and I will send you a template - I reported exactly this way last year for my first ST self-assessed account. FRS is a bit of a wheeze actually...
___
Rob
consult.Autus Ltd