FreeAgent, Bank Interest and the VAT Flat Rate Scheme
You only need to read this if you're a FreeAgent user in the UK, registered for the UK VAT Flat Rate Scheme, and have received bank interest after the 1st April 2009. And even then only if you're really keen...
OK here we go: on 1 Apr 2009 (appropriately enough) the HMRC provided some clarification on the inclusion of Bank Interest within the definition of 'turnover' as far as the Flat Rate Scheme is concerned. This advice can be found here.
Previously FreeAgent did not include Bank Interest in its calculations for Flat Rate Scheme VAT - we'd received conflicting advice from our accounting colleagues - but in the light of that clarification we're including a change in tonight's update to ensure it does.
Like many of our accounting practice partners, we're only considering Interest Received from the 1st April 2009 onwards. However some users will possibly have a VAT return which has already been submitted - in order to make sure the numbers for that VAT Return are not affected (whether or not it's been locked) we're adding some accounting 'journal entries' to cancel out the effect of the software changes but bring the extra VAT liability forward into the current VAT period.
In most cases this will just be a few pence here and there, but we're keen that we're as correct as possible going forward from here.
In fact, although the overall liability on that historical Return will be unchanged, the Box 7 Figure (total value of sales) will be different because of the way we're making the correction. Suffice it to say, you just need to be aware of that in the unlikely event of a VAT Inspection. If in doubt, refer any questions to us or your accountant and all will be well.
We're sorry for any inconvenience or confusion caused.
Do drop me a line if you have any questions about all this, and of course thanks loads for using FreeAgent!
- New Year, new plan: how automating tasks can make 2017 your most successful year yet
- Five things we’ve learned about the UK’s smallest businesses in 2016
- FreeAgent Mobile: don't sweat your business health
- Spreadsheets versus FreeAgent: an accountant’s point of view
- Autumn Statement 2016: contractors feel the impact