VAT on cash flow forecast

[NewTime]

Hello.

I am struggling to understand where to put VAT on the cash flow forecast and despite searching the internet for help, it doesn't help.

Do I add in a row that adds in the VAT? Do I change my sale price to a price without it including VAT? For example, inclusive of VAT it's £1, without it's 83p.

Also do include VAT in total cost of sales? or leave it because of reclaiming?

If you could - Please do! Thank You

 

[STDFR33]

You wouldn’t include sales. You’d include sales receipts which would include VAT.

 

[Rawlinson Pryde]

Assuming you are VAT registered I presume you know what scheme you are on - standard invoice, cash, or another. Depending on your basis will decide how you will need to account for the VAT, as the timing could be different.

You need to include VAT you have paid or need to pay on your invoices and collected/invoiced on sales in the relevant month and then 1 month and 10 days after your month/quarter end date you need to make sure you show it as being paid or received as a refund.

The key is, it is a cashflow, if you buy something with VAT on you have parted with money now that you can recover 1m and 10 days after your VAT period end against the VAT you have collected on your sales.

 

[NewTime]

Thanks for the replies - I understand the VAT refunds and reclaims, but at the moment I am just on the business plan. I just don't know where the VAT goes. Does it go in cash out-flow? Or does the sale price change?

 

[John Hemming]

When you account for VAT on sales (in the cash flow forecast) it is in the gross receipts. You need a row for tax or VAT or something and the monthly or quarterly VAT payment should go in there. You can make an estimate as to how much vat you need to pay.

One of the key cash flow planning things is not to spend your VAT cash before paying it to the government.

 

[Mr D]

Thanks for the replies - I understand the VAT refunds and reclaims, but at the moment I am just on the business plan. I just don't know where the VAT goes. Does it go in cash out-flow? Or does the sale price change?

It is money you collect that does not belong to you - presuming you are vat registered - so you hold it then pay it out.
Your invoices you generate will show vat if applicable as a line item - show it but it's not part of your money.

 

[Spur Support Services]

Sales (net of VAT) = profit and loss forecast (no cashflow)
Sales (including VAT) = Balance sheet debtors, Cashflow receipt based on debtor recovery expectations.
Sales (VAT element) = Balance sheet liability, cashflow payment based on VAT return settlement date (circa 37 days after the end of the quarterly or monthly VAT period).
Purchases (net of VAT) = profit and loss forecast (no cashflow)
Purchases (including VAT) = Balance sheet creditors, cashflow payment based on creditor payment expectations
Purchases (VAT element) = reduces VAT Balance sheet liability, cashflow payment reduction based on VAT return submission dates as above

Don't forget to take into consideration any Retail or special VAT schemes that you may be a part of, within the VAT elements calculated above. Especially consider whether you applied to account for VAT in the VAT Returns on a cash basis.

If you are expecting a strong profit, don't forget to include cashflow for you business tax (corporation or self assessment) in your plan

I hope this helps.

 

[Financial-Modeller]

Who is the audience @NewTime ? What is the purpose of the business plan that you are writing?

 

[MyAccountantOnline]

Hello.

I am struggling to understand where to put VAT on the cash flow forecast and despite searching the internet for help, it doesn't help.

Do I add in a row that adds in the VAT? Do I change my sale price to a price without it including VAT? For example, inclusive of VAT it's £1, without it's 83p.

Also do include VAT in total cost of sales? or leave it because of reclaiming?

If you could - Please do! Thank You

@NewTime if you are setting up a new business are you sure you are going to be VAT registered from day 1? You only need to show VAT in your cash flow forecast if you are going to register for VAT.

If you are going to be VAT registered you will need a line in your cash flow forecast for cash going out to HMRC for VAT, if you need to pay HMRC, and cash in if it will be a VAT refund from HMRC. If you complete VAT returns every 3 months the first VAT payment or refund will generally be in month 4.