Posted by Stuart Christy on 30 Mar 2017
Time to reconsider use of the VAT Flat Rate Scheme?
The VAT Flat Rate Scheme (FRS) has been around for some years now and for those making use of it has been an effective way of managing VAT reporting by being far more straightforward to operate than the standard VAT basis.
Changes are however being introduced to the FRS from 1 April 2017. This is going to affect a wide range of businesses HMRC deems as ‘low cost’ by increasing the flat rate % used to calculate VAT payable to HMRC. The impact of this change is likely to reduce or eliminate the advantage to being on the FRS for low cost businesses, with the scope fairly widely cast in order to capture most businesses who are not buying/selling physical goods as their main business activity.
As an example, where your main business costs are services and travel based, in most cases it is no longer going to be effective to remain on the FRS. This needs to be assessed based on your current profile of expenditure, to determine if the new FRS rules for limited cost businesses will apply. The conclusion could well then be that it makes sense to leave the FRS.
Tax Innovations VAT Services
We have a broad experience of advising businesses using both the FRS and standard VAT accounting basis, so if you think you may be affected by the changes from 1 April 2017 and would like to discuss this with us please get in touch.
If you would like any advice regarding the above article or would simply like to discuss other ways in which we could help you or your business, please contact us on 01962 856 990 or firstname.lastname@example.org
- Top 10 Expat Tax Tips for Individuals Moving to the UK
- Property Partnership Incorporation and SDLT
- Overseas Pension Changes 6 April 2017
- Disguised Remuneration Update – Loan Charge Enacted
- Tax Relief For Residential Mortgages