VAT: Flat Rate Scheme

A VAT flat rate scheme has been developed to assist minor businesses through calculating VAT payments as a flat rate percentage of your turnover. The key advantage of using this VAT flat rate scheme is that it reduces the time spent evaluating your VAT because the percentage is a fraction of all business transactions rather than each individual deal. It will also take some of the stress out of completing VAT returns at the quarter end.

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And because you can easily calculate how much VAT you owe on takings, it can help you to manage cash flow. These proportions are decided in accordance with the trade sector that your business is in however, this will prevent any you from reclaiming any VAT as it forms part of the percentage calculation. For your company or business to use this VAT flat rate scheme, it must have an annual total turnover (including VAT) of less than £187,500.

Not every business will take pleasure in all the advantages of the scheme. For example, if your customers are VAT registered you will have to calculate the VAT and issue VAT invoices in the normal way. Using this scheme can also introduce further complications to businesses that trade to/from aboard. Here at Applegate Accountants we can also advise you on which other schemes this may or may not work in conjunction with.

VAT: Flat Rate Scheme

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