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

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

Under the flat rate scheme, you just maintain a percentage of the VAT charged to your customers. The percentage you maintain varies depending upon which business you are in.

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

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

Must I be on the flat rate scheme?

As you claim a percentage of sales, those with higher sales stand to benefit much more.

Those with low purchases (therefore 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" - 10% flat rate and with negligible input VAT say 500 will save eight,068 per annum by switching to the Flat Rate VAT scheme.

To see how much you may save, attempt the Flat Price VAT scheme calculator

How do I join the Flat Price VAT Scheme?

The easiest way is to call the VAT suggestions line on 0845 010 9000, who will be able to take your VAT registration quantity and relevant specifics on the phone, following which you will be registered soon after roughly 21 days.

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

How do I choose which sector my company falls into?

If your enterprise has sales in two or more sectors, you ought to apply the percentage acceptable to the main business activity, as measured by your sales.

Some sectors are clearer than other individuals. The distinction in between "other company solutions" and "services not elsewhere specified" is far from clear. If you telephone HM Income & Customs for guidance, make positive you maintain a note of the name of the person you speak to and the date of the get in touch with. ppi compensation claim critique