Hi
I have been using Solar successfully for a few months now but we are approaching VAT registration. Our motorcycle training business includes sale of motorcycle tests and certificates which we buy from the Driving Standards Agency and supply to our customers for exactly the same price. These tests I am assured by HMRC can be classed as 'Disbursements' and as such do not count towards calculating our turnover for registration purposes nor do they count as Sales when calculating the VAT due under the Flat Rate scheme.
Could you advise on how I can incorporate the charges for the tests into my sales invoices but not have them included in the calculation of flat rate VAT. For example a sales invoice shows:
3 days training = £399
1 bike test = £15.50
2nd bike test = £75.00
The 3 day's training will attract VAT and count towards VAT sales for flat rate calculation
Both tests do not attract VAT and are not included as VAT sales for flat rate calculation. VAT Helpline advised me they are classed as 'Out of Scope'
Any help would be appreciated
Lynda
Hi Lynda,
Create a new asset account called 'Disbursements Owing'. When you purchase the tests from the Driving Standards Agency, create a Money Paid Out transaction allocated to this account with the VAT Treatment set to 'Out of Scope'.
In your example, when you charge your customers you will need to create two separate invoices in Solar Accounts:
An invoice for £399 with VAT at 20% and VAT Treatment set to 'Sale of Goods or Services to UK Customer'. The Account should be 'Sales Income'.
An invoice fo £90.50 with VAT at 0% and VAT Treatment set to 'Out of Scope'. The Account should be 'Disbursements Owing'.
Regards,
