If your business is VAT registered and its income is under £150,000 then you may be eligible to apply to use HMRC’s Flat Rate VAT scheme. The Flat Rate scheme is designed to make preparing your VAT return quicker and simpler by calculating your VAT bill based on just a percentage of your sales with no need to record your expenses before preparing a return.
- There are not very many Flat Rate percentages to choose between, and you have to match the rate you use to what you do.
- It is a good idea to compare your possible VAT returns, i.e. compare the results using the Flat Rate scheme and using normal methods, before committing to Flat Rate as you can not chop and change and if you leave you can not rejoin it for at least 12 months.
- Use of the Flat Rate scheme could make you money – but it could also cost you money, if your business is in some way different than the norm e.g. if you have more purchases or sales without VAT included in them.
- You still need to do your bookkeeping for purchases, regularly, under income or Corporation Tax rules.
We are very happy to help you review the position to see if joining the Flat Rate scheme would be good for you and to help you register if desired.