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VAT - FLAT RATE SCHEME

 

INVOICE/CASH ACCOUNTING

FLAT RATE

REGISTRATION & RECORD KEEPING

INVOICE/CASH ACCOUNTING

FLAT RATE

REGISTRATION & RECORD KEEPING

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Usually, how much VAT a business pays or claims back from HM Revenue and Customs (HMRC) is the difference between the VAT they charge customers and pay on their purchases.

With the Flat Rate Scheme:

  • you pay a fixed rate of VAT over to HMRC
  • you keep the difference between what you charge your customers and pay over to HMRC
  • you can’t reclaim the VAT on your purchases - except for certain capital assets over £2,000

To join the scheme your VAT turnover must be less than £150,000 (excluding VAT) and you must apply to HMRC. You can join the scheme online (when you register for VAT) or by post.

You can leave the scheme at anytime, but you must leave if you’re no longer eligible to be in it. To leave, write to HMRC. You can’t use the scheme with the Cash Accounting Scheme.

You must leave the scheme if :

  • on the anniversary of joining, your turnover in the last 12 months was more than £230,000 (including VAT) - or you expect it to be in the next 12 months
  • you expect your total income in the next 30 days alone to be more than £230,000 (inc. VAT)

VAT flat rates - these depend on your business type. In your first year as a VAT-registered business the rate is reduced by 1%.  https://www.gov.uk/vat-flat-rate-scheme/vat-flat-rates

                                                http://www.hmrc.gov.uk/manuals/frsmanual/frs7200.htm

Registered office: 61 Friar Gate, Derby, Derbyshire, DE1 1DJ

Adrian Mooy & Co is the trading name of Adrian Mooy & Co Ltd.  Registered in England No. 05770414

Registered to carry out audit work by the Association of Chartered Certified Accountants - auditregister.org.uk 8011438

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01332 202660

61 Friar Gate - Derby - DE1 1DJ

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