In this very short article, aimed at accountants, we’ll take you behind the scenes and show you a bit more about how FreeAgent handles the VAT Flat Rate Scheme.
VAT Flat Rate Scheme surplus
In FreeAgent, there is a pre-set code for the VAT Flat Rate Scheme surplus.
Surplus calculations made automatically - no journals for your client to do
So when your client enters an invoice, FreeAgent will automatically work out the difference between the standard VAT as recorded on the invoice, and the flat rate VAT.
It'll automatically post the journal entries to post the flat rate amount to the VAT Charged code to go on the VAT return, and to post the difference between the flat and standard rate amounts to the Flat Rate VAT Surplus code.
You can see that here, in the VAT Charged code...
...and in the VAT Flat Rate Scheme Surplus code.
So your client doesn't need to worry about posting any journals or working out the Flat Rate Scheme surplus. FreeAgent will do that for him.
No input VAT except capital assets
It'll also not record any input VAT except on purchases of large capital assets. So again, as long as he/she analyses these purchases correctly, your client doesn't need to worry about this.