VAT Flat Rate Scheme

The Flat Rate Scheme was introduced as an effortless way for small organizations to calculate their VAT liability.

The Flat Rate VAT scheme is obtainable to businesses with a taxable turnover below 150,000 excluding VAT (also exempt and non-taxable sales ought to be below 37,500).

Under the flat rate scheme, you basically maintain a percentage of the VAT charged to your buyers. The percentage you keep varies depending upon which industry you ppi reclaim uk are in.

You ignore VAT on your purchases, the VAT you spend simply becomes a expense. Eg If you spend ten + VAT on stationery, the price of that stationery becomes 11.75.

The flat rate scheme does let you to reclaim the VAT on 'large' capital products - exactly where you spend more than 2,000 you can reclaim the VAT on that item.

Should I be on the flat rate scheme?

As you claim a percentage of sales, those with greater sales stand to advantage far more.

Those with low purchases (therefore paying tiny in reclaimable input tax) also stand to achieve from the scheme.

For example A business with sales of 149,000 (excluding VAT) and in the category of "any other activity not listed elsewhere" ppi reclaim uk - ten% flat rate and ppi claims letter with negligible input VAT say 500 will save 8,068 per annum by switching to the Flat Rate VAT scheme.

To see how considerably you might save, try the Flat Rate VAT scheme calculator

How do I join the Flat Rate VAT Scheme?

The simplest way is to call the VAT guidance line on 0845 010 9000, who will be in a position to take your VAT registration quantity and related details on the telephone, following which you will be registered after around 21 days.

Alternatively, you can download the scheme application form from HMRC .

How do I make a decision which sector my business falls into?

If your business has sales in two or more sectors, you must apply the percentage suitable to the principal business activity, as measured by your sales.

Some sectors are clearer than other people. The difference among "other company solutions" and "solutions not elsewhere specified" is far from clear. If you telephone HM Income & Customs for guidance, make confident you keep a note of the name of the particular person you speak to and the date of the contact.