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Where Taxpayers and Advisers Meet

VAT Flat rate claim

170872
Posts: 56
Joined: Wed Aug 06, 2008 3:41 pm

VAT Flat rate claim

Postby 170872 » Wed Jul 11, 2018 11:57 pm

Hi All,

I got a questions and hope someone experienced can help to answer. I have a cleaning company and on a flat rate scheme 11% (just registered by this accountant). The Accountants which was introduce by my friend (Head of VAT Tax) says that they will make an arrangement to invoice my company and they said the VAT element 20% will be paid by my company to them (Accountant) and the net amount of the invoice will be paid by my company direct to my business bank account.

When comes to VAT quarter the accountants will work out the VAT flat rate of 11% and send me this amount to my bank account so that I can pay to HMRC. I clearly don't understand . Should the VAT and Net payment normally paid into my business account and when they calculate the VAT 11% they should let me know the 11% amount figure and I pay to HMRC from my business account?

Is this means that I am loosing something. Say one day if I leave them and move to another accountants, I will lose the 20% VAT that they been receiving and holding all the time on my behalf? And also when comes to company tax i have to pay out of my pocket?

I really don't understand would be grateful if someone can shed some light before I choose to go ahead with this accountants.

Thanks

robbob
Posts: 2594
Joined: Wed Aug 06, 2008 4:01 pm

Re: VAT Flat rate claim

Postby robbob » Thu Jul 12, 2018 8:46 am

When comes to VAT quarter the accountants will work out the VAT flat rate of 11% and send me this amount to my bank account so that I can pay to HMRC. I clearly don't understand . Should the VAT and Net payment normally paid into my business account and when they calculate the VAT 11% they should let me know the 11% amount figure and I pay to HMRC from my business account?
Are you sure this is what they said, did they not say we will set up direct debit of your behalf and submit vat returns - we will then tell you what funds will automatically be collected from your bank account?

If it's as you say this may work for their clients but it's a pretty nonsensical arrangement unless someone isn't able to do the basics of running their own business, you ask the obvious question as to how they have the funds to pay in the first place to be able to pay you the vat. You issue invoices direct to your client and they pay you - any other arrangement means you don't have control or access to your money without hoping that it will arrive when you ask them for it.

A
nd also when comes to company tax i have to pay out of my pocket?
Who knows? if they keep your vat money perhaps they will want to also look after your corporation tax money / your paye and funds to pay your personal dividend tax etc.

Feel free to send me private message if you want more standard advise, hopefully they can answer your questions and its not as you have been lead to believe.


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