Flat Rate Scheme: What do you need to know?
When running a business, ensuring you get VAT right is vital. So, how can you make things easier?
Designed to streamline record-keeping, the VAT Flat Rate Scheme allows you to pay or claim back a simplified fixed rate of VAT to HMRC.
This typically allows you to keep the difference between the VAT you charge to customers and the VAT you pay on your own purchases.
What are the benefits of the scheme?
Maintaining detailed records of sales and purchases can be tedious and time-consuming for any business, and the scheme aims to simplify this.
Additionally, it offers fixed rate percentages that are lower than the standard rate, supporting cash flow management.
Are you eligible?
If you wish to use the scheme, you must meet the criteria. This includes:
- Being registered for VAT
- Expecting an annual turnover (excluding VAT) of £150,000 or less
- Having no ‘association’ with another business.
However, there are some instances where your company will not benefit from the scheme.
For example, if your customers are VAT registered, you must determine the VAT and issue VAT invoices in the usual way.
Other reasons the scheme will not be right for you include:
- Your business buys and sells goods from outside the UK, which may make the scheme more complicated
- You normally claim input tax.
What happens next?
If your application is successful, HMRC will confirm this in writing.
The letter will state when you can begin to use the scheme, which will typically be from the start of the VAT period once your application is received.
You may request an earlier or later start date. When doing so, HMRC will take multiple factors into account, including when you apply and your compliance record.
It is advisable to speak to an accountant before joining the scheme to be sure it is right for your business. Please contact our team today.
Social
Recent Posts
- Steps for employers to remain compliant with National Minimum Wage increases
- Simple ways to invest in your team this Career Development Month
- Simple ways to invest in your team this Career Development Month
- Double cab pickups to be taxed as company cars as Government confirms U-turn
- How to ease the pressure within your business this Stress Awareness Day
Archives
- November 2024
- October 2024
- September 2024
- August 2024
- July 2024
- June 2024
- May 2024
- April 2024
- March 2024
- February 2024
- January 2024
- December 2023
- November 2023
- October 2023
- September 2023
- August 2023
- July 2023
- June 2023
- May 2023
- April 2023
- March 2023
- February 2023
- January 2023
- December 2022
- November 2022
- October 2022
- September 2022
- August 2022
- July 2022
- June 2022
- May 2022
- April 2022
- March 2022
- February 2022
- January 2022
- December 2021
- November 2021
- October 2021
- September 2021
- August 2021
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
Categories
- Accountancy
- Accounting
- Agriculture
- Apprentices
- Asset and Wealth Management
- Ben Allen
- Blog
- Blogs
- Bookkeeping
- Brexit
- Budget
- Business
- Business Advice
- Business Advice News
- Business Blog
- Business News
- Business Start-ups
- Capital Allowances
- Cash Flow
- Cash flow management
- Charities
- Corporate Tax
- Corporation Tax
- Covid-19 Home working and expenses
- Economy
- Employees
- Employment
- Employment and payroll
- Family Businesses
- Finance
- Financial News
- Financial Planning
- Fraud
- Funding
- Government Funding
- Grants
- Guide
- HMRC
- Home working and expenses
- Income Tax
- Inflation
- Inflation / Interest Rates
- Inheritance
- Insurance
- Investment
- Latest Business News
- Latest News
- Legal
- leisure and hospitality
- Loans
- Making Tax Digital
- Money
- MTD
- News
- PAYE
- Payroll
- Pension
- Pensions
- Personal Tax
- Personal taxes and finances
- Property
- Property News
- R&D
- Redundancy
- Scam
- Self Assessment
- Self Employed
- SME
- SMEs
- SMEs / Business
- Start ups
- Tax
- Tax Blog
- Tax News
- Tax Planning
- Tourism
- Uncategorized
- VAT
- VAT and MTD
- VAT deferral
- Wages
- Wealth Management