Am I being taxed twice? FRS/Corporation TAX

Romum

Hi this seems a simple question but I am having trouble finding the answer - can anyone please help.

I am on the FRS. When working out my corporation tax for year end my accountatnt has included the input tax (i.e. difference I keep from the flat rate scheme = 4.5% of turnover before VAT added) as profit? If so, it is then subject to corporation tax (20%). Which means that the benefit from being on the FRS is further cut to 3.6%. Am I being taxed on my tax?

This doesn't seem right as this 4.5% is to cover all the VAT I am paying on expenses etc. Can anyone clarify this for me. Should this be included as profit and if so why? thanks

Petmidget

Your accountant is correct, the FRS benefit is treated as additional sales when calculating profits for corporation tax. When appraising the use of FRS this should be factored in as to whether it is worthwhile.

And I think your intrepretation of what FRS is intended to do is a bit wrong, it isnt intended to benefit you, its simply meant to put you in the same position as using normal vat but some people depending on the makeup of their businesses are in a position to benefit by fluke not design.