Jay Cooke

Lee/CodeNinja Where are you getting the zero rate from? There is no zero rate under the flat rate scheme. Childcare or holiday camps are not zero rated. They are standard rated or they are EXEMPT. Two entirely different things. Exempt means you cannot reclaim input tax or even register for VAT, where you have both exempt and taxable sales, you are partially exempt and must not reclaim any input tax until you have performed a partial exemption adjustment on each VAT return. If you are saying your childcare is exempt, then be aware that under flat rate scheme you still have to declare output tax at 12% (based on your chosen flat rate), even on those sales which are exempt, so it'll be costing you money. Also, if you are saying your childcare is exempt, then your historical VAT recovery and deregistration was potentially wrong and you owe HMRC money for VAT reclaimed on equipment you were not entitled to. Also, you cannot have mixed flat rates, you pick the dominant supply, so if you are saying 12% is the dominant supply, then ALL your sales are at 12%, even the "zero" rated and exempt sales (but note there are no zero rated services relating to childcare in the legislation, it's exempt welfare services). Also factor in the limited cost trader rules.

CodeNinjas.....you need to get an Accountant, as you've indicated a number of potential issues which may only be compounded without proper advice. 1. If you are OFSTED registered then you could be seen as supplying exempt education services are more likely taxable, it depends on various factors, nature of your supplies, etc but holiday camps is a tricky area for VAT, these can be exempt or taxable supplies depending on what goes on/activities, who delivers the event, etc. If you are a sole trader, the supply of education of a subject ordinarily taught in schools is potentially exempt when supplied by you personally as a sole trader and standard rated when supplied by your employees (under private tuition rules). https://www.gov.uk/guidance/vat-on-education-and-vocational-training-notice-70130 2. If you are indeed supplying exempt education, you had no legal right to register for VAT in the first place and any input tax you reclaimed in the first 10 months was not yours to reclaim, equally, you should not have been charging VAT on your sales. 3. Assuming you are not supplying exempt education and your sales are standard rated, when you deregistered for VAT initially, if the value of your stock/goods/assets was more than £5k net then you would needed to have repaid output tax to HMRC upon deregistration relating to the stock/assets you held, unless the stock/assets were valued at less than £5k. A handful of computers and monitors and workstations/chairs would easily hit the £5k mark, as long as you declared output tax on those when you deregistered then that's good. 4. Flat rate scheme has a "limited cost business" rule, whatever flat rate you choose, if you meet the conditions for limited cost business then you must use a higher percentage rate than the one you have chosen, limited cost businesses are those which have few or minimal costs (such as an IT consultant or similar business with next to no costs/overheads). It might be one VAT quarter you are limited cost business and use the higher 16.5% rate and in another quarter you are not a limited cost business and can use your normal flat rate percentage. https://www.gov.uk/guidance/flat-rate-scheme-for-small-businesses-vat-notice-733--2 5. If your supplies are exempt education, then on the flat rate scheme you do not charge VAT to your customers but you still have to declare output tax at your flat rate percentage or the limited cost rate so it's not ideal. You really need to bottom out whether your supplies are taxable or exempt or both and assuming they are taxable, would flat rate provide you any benefit - it was meant as a simplification but seeing as you have to file returns digitally now (MTD) the simplicity is somewhat lost and because of the limited cost trader rules, some of the financial benefits are lost too. Numbers need to be crunched to determine the outcome. 6. If you make a mixture of taxable and exempt supplies then you would also be partially exempt, meaning there is a potential restriction on how much input tax you can reclaim on purchases.

That link to getting an EORI number, the link will ask you to log into your government gateway. I presume you have a government gateway (2 digit User ID and a password) as I presume that you created the gateway to submit your VAT registration. if you applied for VAT registration in another way, then you need to create a government first, the same link above will guide you to setting up a gateway if you do not already have a gateway.

Use this link to obtain an GB EORI number https://www.gov.uk/eori That will record the import as coming into the UK with the (temporary) EORI number you have been issued (via above link). It will allow the freight agent to import the goods and it will generate a C79 certificate which is proof import VAT was paid on the shipment . When you get your VAT number issued, you will be sent an email by HMRC asking if you already have an EORI or if you want to have a new EORI which matches the same as your VAT number. At this point, you can then get an EORI matching your VAT number. You can also request HMRC associate/link the "temporary" EORI number with your new EORI number. You will have received in the post a C79 certificate (proof of import VAT being paid by the courier for the imported IT equipment) and you can reclaim this as input tax on your VAT return, technically the C79 will be under the temporary EORI number but you will have already requested HMRC associate your temporary EORI with your correct/VAT number EORI and there should be no issue. Not perfect solution but is very frustrating waiting for a VAT number, HMRC can take 203 months to process a VAT number and like you, you need to import things before you start trading in the UK. I have many clients in the same situation.

Visit this link https://www.gov.uk/vat-repayments Scroll down to the section "repayments to an overseas bank account" and there is a link in this section that takes you to your government gateway/VAT portal, log in to your gateway and then it will ask for your IBAN/BIC details. You must use the above link, you cannot access the special bank pages by just logging into your gateway.

Why are you raising a manual invoice? Sequential means what it say, sequential. If you raise a manual invoice, it should follow the last invoice issued by you. So if the last invoice was 248 then your manual invoice will be 249. Remember, for VAT all your invoices must be recorded in your accounting software or spreadsheet, so that when the VAT return is submitted, it contains a digital record of each sale, so even where you raise a manual invoice outside of your normal accounting system, you still have to make a manual entry in your VAT account/VAT records so that the manual invoice feeds into your VAT return.

If it is a rent free period then why are you being charged VAT by the landlord? if there is no rent then there is no VAT. Also, you ask HMRC "how can I reflect this on the invoice". That suggests you are raising the invoice, why are you raising an invoice? Are you trying to issue a VAT only invoice to yourself from yourself for the rent free period?