Prepare a VAT return under the Flat Rate Scheme

There are special rules that apply to prepare a VAT return under the VAT Flat Rate Scheme. This VAT Flat Rate Scheme is suitable for small businesses with yearly sales of up to £150,000. Under this scheme, you calculate your VAT by applying a flat rate percentage to your total sales including VAT.

For example, your total sales including VAT for the VAT return period is £85,500 and you are in the publishing business, the flat rate percentage for a publishing sector is 11%. In this instance, your VAT payable will be £9405.

How to complete the VAT Return under the Flat Rate Scheme

Box 1VAT due in this period on Sales£9,405.00
Box 2VAT due in this period on EC acquisitions£0.00
Box 3Total VAT due (the sum of Boxes 1 and 2)£9,405.00
Box 4VAT reclaimed in this period on purchases£0.00
Box 5Net VAT to be paid to Customs or reclaimed by you (Difference between Boxes 3 and 4)£9,405.00
Box 6Total value of salesexcluding VAT£85,500
Box 7Total Value of purchases, excluding VAT£0.00
Box 8Total value of EC sales, excluding VAT£0.00
Box 9Total value of EC purchases, excluding VAT£0.00
Source: GOV.UK

How to fill in each box is explained

Box 1 – Let use the same example above, you are in the publishing sector and the flat rate percentage is 11%. The VAt calculated on the annual sales of £85,500 is £9,405. You enter £9,405 in box 1.

Click here for a list of trade sectors flat rate percentages approved under the Flat Rate Scheme.

Box 4 – If you use the VAT flat rate scheme, you do not normally make a separate claim for input VAT including any VAT on imports or acquisitions. This is because the flat rate percentage for your trade sector includes an allowance for input VAT.

However, you can recover VAT on any single purchase of capital goods of £2000 or more inclusive of VAT and VAT on stocks and assets in hand at registration.

Additionally, you use Box 4 to claim bad debt relief and to account for reverse charge transactions.

Box 6 – You enter the total value of sales including VAT.

Plus the following transactions in Box 6:

  • Sales less the VAT amount not accounted under the flat rate scheme. For example, you bought a business asset that you have reclaimed input VAT on.
  • EC sales
  • Reverse charge transactions

Box 7 – Generally there will no figure in this box unless you bought business assets costing more than £2000 including VAT and you are claiming the input VAT in box 4.

In addition, you also include the following in Box 7

  • EC purchases
  • Reverse charge transactions

Companies House filings

Besides, maintaining good VAT accounting records and submitting your VAT return on time to HMRC, if your VAT registered business is a limited company, you must also deliver your company accounts and confirmation statement to Companies House promptly.

If you require any help with your VAT returns, company accounts and confirmation statement filing, feel free to contact our accountants, they will be more than happy to assist you to comply with your filing requirements.

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