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Flat rate VAT on bank account interest
I cannot include bank account interest on the VAT return info via freeagent......
My accountant insists that flat rate VAT must be paid on all business income including bank account interest and showed me the document at the following url:-
http://customs.hmrc.gov.uk/channelsPo...
3.3 talks about bank account interest being an exempt supply
6.2 says flat rate must be paid on all excempt supplies
As freeagent doesn't include this in the calculation on the VAT return screen, please could someone clear this up for me?
Many thanks
Andy.
My accountant insists that flat rate VAT must be paid on all business income including bank account interest and showed me the document at the following url:-
http://customs.hmrc.gov.uk/channelsPo...
3.3 talks about bank account interest being an exempt supply
6.2 says flat rate must be paid on all excempt supplies
As freeagent doesn't include this in the calculation on the VAT return screen, please could someone clear this up for me?
Many thanks
Andy.
I’m concerned
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Inappropriate?This is VAT at its most ridiculous!
Your accountant is correct.
Hidden away in Notice 701/49 Finance is the statement Interest received on money deposited is consideration for an exempt supply .
Which means that interest on a business bank account must be included. How bl***y stupid.
Also in Notice 701/49 are subjects such as:
Trading on non-UK exchanges
Interest rate swaps
Financial Spread Bets
All highly relevant to a business eligible for the Flat Rate scheme (Turnover < £150K pa)!!!
I’m annoyed by stupid rules
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Inappropriate?Thanks for this. Should FreeAgent be changed to reflect this ? (or can it be done with the existing system, I can't immediately workout how to do this)
I’m concerned as VAT return due sunday
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Inappropriate?I wouldn't worry too much if the difference is only small. I would use the figures in FAC.
I'm sure Ed will fix this and in doing so the next return will hopefully correct this one. If not you can always do the adjustment yourself.
I’m frustrated with VAT
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Inappropriate?Andy, Stuart - we'll aim to include this is some other improvements we're making to the VAT calculations early in the New Year.
Thanks for bearing with us... -
Inappropriate?Ed, did this get done? My accountant is also now asking me to make sure I do this. -
Inappropriate?Charles, no it didn't, sorry.
And it won't make it into our next release which is tonight, but I'll make sure it's in for the one after (about a fortnight later).
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Inappropriate?Is there any progress on this? It is only a small amount, but it would be nice if everything added up - it would also be useful to be able to make manual adjustments to the VAT account.
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Inappropriate?Up to now I have been making manual adjustments for FRS VAT on interest as follows...
Work out the VAT due on interest received (i.e. interest earned * flat rate percentage), then add Journal entries to debit 'Interest Received' and credit 'VAT Charged' for that amount. The VAT owed should then be included on your VAT return screen and all the numbers should tie up.
I’m hoping this helps
EMPLOYEE
