We will submit our fourth quarter return under the flat rate VAT scheme at the end of this month. To date this year (Q's 1-3), I have paid HMRC VAT at the 14% rate for Management Consultancies.
However I now realise we should have classed ourselves as a ‘limited cost business’, which means we should have been paying 15.5% (16.5%, less our 1% discount) for our first 12 months on the Fixed-Rate scheme.
The VAT collected in Q4 amounts to £4,396.11 at 15.5%. I have changed the rate for my next return so that Q4 figure is correct. However I now need to make an adjustment to the same return to allow for the underpayments in VAT for the prior three quarters.
On the basis of my calculations the underpayments work out at:
- £262.94 for Q1
- £507.99 for Q2
- £489.60 for Q3
- Total: £1,260.53 for Q1-3
I will then need to deduct £135.72 in unclaimed fixed asset expenditure resulting in a total adjustment of £1,124.81
I have attempted to make the necessary adjustments in QuickBooks several times without success. I am clearly doing something very wrong. Can anyone advise me how I should sort this out?
