Re: Preparing accounts using the flat rate scheme
- From: PeterSaxton <peter@xxxxxxxxxxxxxxxxx>
- Date: Mon, 14 Jan 2008 00:08:47 -0800 (PST)
On 13 Jan, 12:54, Ronald Raygun <no.s...@xxxxxxxxxxxxxxxxxxxxx> wrote:
PeterSaxton wrote:
Flat Rate Scheme for small businesses
HMRC Reference:Notice 733 (March 2007)
This is an extract from the above document:
"7.8 How do I prepare business accounts for income tax purposes while
I am using the flat rate scheme?
It is expected that accounts for businesses who are using the scheme
will be prepared using gross receipts, less the flat rate VAT
percentage, for turnover and that expenses will include the
irrecoverable input VAT."
Yet Page SEN6 of the Notes on Self Employment say:
"If you are registered for the VAT Flat Rate Scheme you may show
details of your business income and allowable expenses, either:
all net of VAT (that is, with the VAT figure taken off) - method 1, or
all inclusive of VAT - method 2.
..........
If you use method 2 include the net payment to us under the Flat Rate
Scheme as an expense at box 3.63."
Method 2 is the easier way to account for VAT and I would expect that
most businesses would prepare accounts using method 2 but then the two
documents appear contradictory.
There is no contradiction as such because the first document says that
"it is expected that" method 2 be used, which does not mean that that
method *must* be used. It just means they think it likelier -as you do-
that people will use that method in preference to the other
Despite what you say it would appear that HMRC favour one way of
producing accounts and another of completing tax returns which would
show totally different turnover figures!
.
- References:
- Preparing accounts using the flat rate scheme
- From: PeterSaxton
- Re: Preparing accounts using the flat rate scheme
- From: Ronald Raygun
- Preparing accounts using the flat rate scheme
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