Two VAT queries

[lcdfa]

1.Under the Flat rate scheme is the 1% reduction for the first year applicable only to new registrations?

2. If operating on a cash basis how is cash received for invoices raised before registration treated on the VAT return, included or excluded?

We have had conflicting advice from HMRC regarding these two issues.

Any comments/advice would be appreciated.

 

[Robert Pearce]

1.Under the Flat rate scheme is the 1% reduction for the first year applicable only to new registrations?

The discount applies only to businesses in their first year of VAT registration (as opposed to it being available for everyone in their first year under the flat rate scheme) - see here for confirmation.

 

[3pic]

Your first question has already been answered, the 1yr discount applies only to newly registered traders.

If I understand your 2nd question, it appears you have raised invoices prior to your registration date but then since recevied the money after you were registered.

For example, you issued an invoice 01 Jan 2012 and you are registered for VAT (effective date of registration) from 01 April 2012. Your invoice was dated 01 Jan 2012 and so would not have VAT shown on the invoice nor was VAT charged becuase you were not VAT registered at that point in time.

When you recevie the payment in April for the invoice you raised in Jan, you would not include this in your turnover calculation for flat rate as this sale was when you were not registered for VAT.

 

[lcdfa]

Many thanks for these responses which are very helpful in clarifying the position.