When it comes to filling out a flat rate VAT return, you need to be sure you follow all the specific rules attached to the scheme so that you include the right figures on your return.
What You Need to Get Started Filling Out Your Flat Rate VAT Return
You need to fill out a flat rate scheme VAT return slightly differently to a standard VAT Return.
The main differences between a Flat Rate VAT Return and a Standard VAT Return are:
- The VAT on your sales is calculated at your applicable flat rate percentage (not the standard VAT rate of 20%)
- You cannot reclaim any input VAT except on capital purchases over £2,000.
Still unsure about how the VAT Flat Rates Scheme Works? Learn more here.
1. Confirm Your VAT Flat Rate Percentage
HMRC sets out the flat rate percentage you should use, depending on what business you are in
You will find this within your Flat Rate Registration Application or you can look it up here.
If you are newly VAT registered then you may be entitled to the 1% discount.
2. Get All Your Information Ready
To fill out your Flat Rate VAT Return you are going to need:
- Your HMRC Online Account login and password so you can fill in your flat rate VAT return online;
- Details of the total amount you have invoiced during the VAT period covered in your return;
- Copies of any purchase invoices over £2,000 that you need to reclaim VAT on;
- Your VAT flat rate percentage.
3. Filling Out the Flat Rate VAT Return
You’ll need to fill out your flat rate VAT return online.
If you are on cash accounting, when filling out a Flat Rate VAT Return you must include figures based on when you were paid by your customers or paid for any capital assets over £2,000.
If you are on invoice accounting, the figures in your flat rate VAT return must be based on the date that you invoice your customer.
Let’s work through box by box what you need to include and how to work out the numbers you need:
Box 1 VAT Due on Sales and Other Outputs
Enter the amount of flat rate VAT you need to pay to HMRC.
Work this figure out by multiplying your sales for the quarter (either paid or invoiced) including VAT by your Flat Rate Percentage.
Example: if you have invoiced your customers £10,000 including VAT and your flat rate percentage is 14.5% you would include £1,450.00
Box 2 VAT Due on in this Period on Acquisitions from other EC Member States
If you have not bought any goods from EC member states then enter 0.00 into this box of your flat rate vat return.
If you have purchased goods (not services) from EC member states, then read this on Box 2 EC Acquisitions to find out how to handle these types of purchases.
Box 3 Total VAT Due
This is worked out automatically online by HMRC for you. But it is the total of box 1 and box 2 added together.
Box 4 VAT reclaimed on Purchases and other inputs (including EC acquisitions)
When you are on the flat rate scheme you do not claim back VAT on your purchases so you would generally need to enter 0.00 unless:
- You are claiming for capital asset purchases over £2,000 including VAT, in which case you enter the amount of VAT you paid or;
- You have made EC acquisitions and need to enter details of the goods you have bought on your VAT returns.
Box 5 Net VAT to be Paid or Reclaimed
This is also automatically worked out but it is the difference between Box 3 and Box 4.
Box 6 Total Value of Sales
Enter into Box 6 the total amount of income that you used to work out your flat rate percentage including VAT.
This is the figure that was invoiced/collected from your customers including VAT at the standard rate of 20% not your flat rate percentage.
Box 7 Total Value of Purchases
When you are on the flat rate scheme you do not claim back VAT on your purchases.
Generally, you need to enter 0.00 unless you:
- Are claiming for capital asset purchases over £2,000 including VAT, in which case you enter the amount of your purchases excluding VAT or;
- Have made EC acquisitions and need to enter cost (excluding VAT) of the goods you have bought.
Box 8 Total Value of Supplies of Goods excluding VAT to O
ther EC Member States
You will need to complete this box of your flat rate VAT return with 0.00 unless you have supplied goods to other EC member states.
In this case, you would need to enter the total cost of the goods you have supplied, excluding VAT into this box.
Remember this box relates to just goods and not services.
It may also result in a request for you to complete an EC Sales List, breaking down details of the amounts and which countries you have supplied.
Figures entered in this box must also be included in your box 6 total as well.
Box 9 Total Value of all Acquisitions of Goods and Related costs, excluding any VAT, from other EC member states
If you have not bought goods from VAT registered business in EC member states enter 0.00 into this box.
If you have bought these goods then you will need to enter the net amount of these purchases – find out more details on Filling Out Your VAT Return: Box 2 EC Acquisitions here.
Figures entered in this box must also be included in your box 7 total as well.
Paying Your Flat Rate VAT
Once you have submitted your flat rate VAT return, you must get your payment over to HMRC. Don’t delay because there are penalties for failing to pay on time.
HMRC sets out a number of ways you can do this, along with differing deadlines depending on how you choose to pay.
Here are some of the common ways you can pay your VAT:
Internet or Telephone Banking
If you choose to pay by this method you receive an additional 7 days to file & pay your VAT because payments of this nature are generally immediate (unlike a cheque which has to clear).
So a Flat Rate VAT return for the quarter ended 31 March 2018 would be due for online filing & online payment by 7 May 2018 rather than 30 April 2018.
If you wish to pay using this method, then these are HMRC bank details to use:
Account Name: HMRC VAT
Account Number: 11963155
Sort Code: 08-32-00
Bank Address: Barclays Bank Plc, 1 Churchill Place, London. E14 5HO
Make sure you use your VAT number as your reference when you make the payment so HMRC knows how to allocate your payment.
By using direct debit, you avoid the need to make a manual payment each time you file a VAT return.
You can set up a direct debit with HMRC either at registration or by going to your HMRC VAT Online account.
Your Direct Debit must set up your online before you submit your next flat rate VAT return. You’ll need to leave at least 2 bank working days before the return is due when the due date falls on a weekday.
For example, if your flat rate VAT return is due on Tuesday 7 September, 2 bank working days before this is Friday 3 September.
If your return due date falls on a weekend or bank holiday you will need to set up your DDI at least 3 bank working days before the return is due.
For example, if your return is due on Sunday 7 November, 3 bank working days before this is Wednesday 3 November.
If your return is due in less than 2 or 3 bank working days as shown in the examples above then for this return only you will need to pay by a different electronic method.
Debit or Credit Card Online
HMRC accepts payment for VAT by credit or debit card over the internet.
Head over to the HMRC website and complete their online form. They will collect details about your payment, before being taken to payment processing.
HMRC does offer other methods such as Giro or cheque payments.
If none of these ways to pay your flat rate VAT return is suitable, go to the HMRC website for more payment options.
Flat Rate VAT Return Example
Jo is a self-employed bookkeeper earning £100,000 per year so must register for VAT.
Jo is considering joining the VAT Flat Rate Scheme. Here’s what she needs to do:
Check the VAT Flat Rate Scheme is Beneficial
The VAT Rate Scheme can help self-employed individuals by:
- Simplifying VAT workings and record keeping;
- Resulting in a ‘profit’ from using a lower VAT percentage.
Jo must check how much purchase VAT she will pay otherwise the VAT Flat Rate Scheme can turn out to be costly.
Once happy, Jo can register online for the VAT Flat Rate Scheme.
Once Jo has registered, every invoice raised must still show VAT at 20% on them, not her flat rate scheme percentage of 14.5%.
So if Jo raises an invoice £2,500, the invoice total would be £3,000 (£2,500 plus VAT).
Filling out the Flat Rate VAT Return
In our flat rate VAT return example, let’s assume that during the quarter Jo had:
- Invoiced £25,000 plus 20% VAT;
- Bought a computer for £1,800 plus 20% VAT.
The Flat Rate VAT return in this example will look like this:
|Box 1 (£25,000 x 14.5%)||£3,625.00|
|Box 4 (£1800 x 20%)||£360.00|
|Box 7 (25,000 x 20%)||£30,000|
Jo can only claim back the VAT on her new computer but no other expenses. This is it meets the rules of Capital Assets over £2,000.
Updated 10 July 2019
Anita is a Chartered Accountant with over a decade of experience taking self employed business owners from financially confused to business savvy.
She is the creator of the ‘Go Self Employed’ website, which her corner on the internet where she makes self employment less terrifying.