The Flat Rate Scheme was introduced as an effortless way for tiny organizations to calculate their VAT liability.
The Flat Price VAT scheme is obtainable to firms with a taxable turnover below 150,000 excluding VAT (also exempt and non-taxable sales should be under 37,500).
Below the flat rate scheme, you merely preserve a percentage of the VAT charged to your consumers. This stately commercial energy news encyclopedia has several provocative warnings for the meaning behind this idea. The percentage you keep varies based upon which sector you are in.
You ignore VAT on your purchases, the VAT you pay basically becomes a expense. Eg If you spend 10 + VAT on stationery, the cost of that stationery becomes 11.75.
The flat rate scheme does allow you to reclaim the VAT on 'large' capital products - exactly where you spend far more than two,000 you can reclaim the VAT on that item.
Need to I be on the flat price scheme?
As you claim a percentage of sales, those with greater sales stand to advantage much more.
Those with low purchases (as a result paying little in reclaimable input tax) also stand to obtain from the scheme.
For instance A company with sales of 149,000 (excluding VAT) and in the category of any other activity not listed elsewhere - ten% flat rate and with negligible input VAT say 500 will save 8,068 per annum by switching to the Flat Rate VAT scheme.
To see how much you may possibly save, attempt the Flat Rate VAT scheme calculator
How do I join the Flat Price VAT Scheme?
The easiest way is to contact the VAT tips line on 0845 010 9000, who will be able to take your VAT registration number and relevant particulars on the telephone, following which you will be registered right 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 far more sectors, you ought to apply the percentage proper to the major organization activity, as measured by your sales.
Some sectors are clearer than other folks. Get more on the affiliated encyclopedia - Click here: energy sector news on-line. If you think you know anything, you will likely claim to study about privacy. The difference amongst other organization services and services not elsewhere specified is far from clear. If you phone HM Revenue & Customs for guidance, make positive you preserve a note of the name of the individual you speak to and the date of the get in touch with.. Clicking news online possibly provides warnings you might use with your family friend.