Vat and self assessment

STRAWB

I am just about to complete my self assessment for the tax year just gone and its the 1st year i have been VAT registered question is do i take the vat i have already paid on my turnover off my turnover total for my tax assessment? if that makes sense?
So for example if my turnover was 100,000 and i have paid 5000 vat do i put my turnover as £95000 when completing my self assessment form.

RayWolfe

VAT is not part of your turnover. All you are doing is collecting tax for the Revenue it is not income, expenditure, profit or loss.

STRAWB

i am on the flat rate scheme so have already paid a percentage on my turnover so it makes no difference to the amount of turnover i put down on my self assessment

Elaine_Wilson

The VAT that you pay to HMRC is the difference between the output tax collected from your cusdtomers and the input tax charged by your suppliers.

When you complete the self assessment form there are two ways to do this. The usual way is to exclude VAT from all the figures, as this reflects the true value of the transactions to your business.

The alternative way is to include all the VAT - that is, to show turnover as the actual amounts received and the expenses at the actual amounts paid. If you follow this method you will need to enter the amount paid to HMRC as an expense to balance things out.

The two methods should result in the same net profit.

Elaine_Wilson

Aargh, you posted again while I was typing my reply!

My answer still stands but the method chosen will depend on your bookkeeping. All my clients on the flat rate scheme use the second method as they do not record the input VAT on their expenses (which is, of course, the whole point of the FRS - to simplify things).

STRAWB

Ok thanks!