Flat Rate VAT Calculation is Wrong in Tax Payable

The tax payable calculation is taking the FRS tax percentage as the total of an invoice, including the 20% VAT element.

I.e. £100 + VAT @20% =£120 on the invoice. Manager calculates the Flat rate tax at 13% of £120 rather than 13% of £100 in the Tax payable tab.

Your example has both 100 @ 20% and 100 @ 13%
Tax Exclusive : 100 + 20% = 120
Tax Inclusive : 120 - 16.666% = 100

Where is this Tax Payable tab ?

On the summary page there is a Tax Payable section. If there is any tax in your accounts then the amount shows here.

For Flat Rate Tax Scheme I charge 20% and pay HMRC 13%. Therefore the Tax Payable calculation should be 13% of the amount to be charged, before VAT is added. This is what I pay to HMRC. So in my example of £100 billed I add and collect £20 in VAT and pay HMRC £13.

The programme is calculating the Tax Payable as 13% of the amount to be charged INCLUDING 20% VAT. This is clearly more.

Unless of course I have completely misunderstood.

Thanks for the clarification
Just to ask, if you are charging 20 and paying 13 where does the 7 difference go.
13% of 120 = 15.60 - is this the amount going to the Tax Payable account.

The flat rate scheme allows me to keep the 7% difference. The rates differ for different professions and are a way of persuading people to collect VAT on behalf of HMRC. Primarily of use to businesses offering services rather than goods so VAT can’t be offset against VAT paid. The HMRC website has full details.

The amount going to the tax payable section is as you say £15.60. It should be £13.

Understand, but where does the 7 go in your accounts - income ?
If yes, then does it become taxable of tax free earnings.

1 Like

Ah, sorry. I misunderstood your question.

The 7 goes into income and is then taxed so HMRC gets just a bit more from me. It sometimes feels like I am working for the government more than myself.

At 7% instead of 100%, a very cheap public servant
Is Manager handing the current (incorrect) 4.40 correctly

Why do you think it’s wrong. VAT FRS tax is calculated on VAT-inclusive amount.

See: VAT Flat Rate Scheme : Work out your flat rate - GOV.UK

You bill a client for £1,000, adding VAT at 20% to make £1,200 in total.
You’re an IT consultant, so the VAT flat rate for your business is 14.5%.
Your flat rate payment will be 14.5% of £1,200, or £174.

So what Manager is doing is correct. What you expect Manager to do would be incorrect.

My apologies. You are correct and I misunderstood.

sir if your problem is solved please tell me also about this i have same problum in invice tax showing correct but in summry wrong figer

@Subhani, please do not just say something is wrong. Post screen shots of the invoice and whatever you think is wrong. Also, make sure you have read and understand the portion of this Guide covering flat rate tax codes: Create and use tax codes | Manager.

@Subhani could you please check the latest version (20.6.41)

Hi, Sorry to add to an existing thread but I have the same issue with flat rate vat calculation that has recently appeared (I’m using v20.6.39)

The flat rate VAT is no longer calculating correctly and instead is using the full VAT rate. I have attached a screenshot of a quick mock up business with a £100 net invoice with a VAT rate of 20% and a flat rate of 15.5%. The VAT liability should be (£100 + 20%) * 15.5% = £18.60 but manager.io is incorrectly showing as £20

Incorrect calculation in 20.6.39

Tax setting:

Fortunately I saved an older version of manager (20.6.7) and this works correctly when exporting and importing the business so nothing changed other than Manager.io version:

Thanks in advance,

As my posts are limited as a new user I’ve attached a sample business that shows the issue:

TEST (2020-06-04).manager (44 KB)

And the invoice used:

@Paul_C please test the latest version (20.6.41) - should be resolved now.

Wow, thanks for the really quick response!

Unfortunately, whilst the issue has changed it’s not quite right.

The version (20.6.42) which is now on the download page gives a flat rate VAT amount of £16.10 when it should be £18.60. I’m not sure how the £16.10 is calculated unfortunately.

You are right. My bad. Check the version (20.6.43)

That’s all working correctly again. Thanks so much for resolving so quickly and for Manager in general!

Great work @lubos