I am moving my company from the Flat Rate Scheme (on an accruals basis) to normal VAT on a Cash Basis. HMRC have authorised me leaving the FRS. I have about £3000 of VAT accounted for on invoices issued in the last Flat Rate Scheme VAT period which have then been paid in the current period. (These invoices are £15k, plus £3k VAT) How do I adjust my first cash basis VAT return for this? Do I reduce the Box 1 total by £3,000 and reduce the Box 6 total by £15,000? Thank you for your thoughts!
Obviously, when you start to use the cash accounting scheme you must avoid accounting for VAT twice on any supplies made or received before you began to use the scheme. Therefore, you must note down any transactions accounted for under the fixed rate scheme (and that includes supplies made to you) and exclude them from the VAT Returns under cash accounting. One thing to note is that you may be able to make a stock adjustment on leaving the flat rate scheme.