If you run a business, have you considered going on the VAT flat rate scheme? Providing your VAT exclusive turnover is less than £150,000 HMRC will let you pay a fixed percentage of your sales (including VAT) each quarter, rather than analysing all the expenses and deducting the VAT you have suffered on your purchases from the VAT collected on your sales. Administratively, this benefits the business by it not needing to separately record the VAT it incurs on purchases, or indeed VAT it charges on Sales.
Once in the scheme, the business may remain in it until annual VAT inclusive turnover increases 230,000. This measure is checked on each anniversary date of the business joining the scheme.
There is a 1% reduction off of the flat rate percentage in the first year of VAT registration.
You must still issue VAT invoices to your VAT registered customers. Your customers will treat these as normal VAT invoices. When you come to calculate the scheme turnover, do not forget to include the VAT inclusive total of any invoices you have issued. You must keep copies of all sales invoices that you issue to your VAT registered customers.
The fixed percentage to apply to your turnover varies, dependant on the type of business sector you are in.
You can join the scheme whether you are already VAT registered, or if not yet registered, you can register and then join the scheme (remembering the 1% discount for newly VAT registered businesses).
In summary, the VAT flat rate scheme can often save costs for your business, not only by reducing the administrative requirements for VAT returns, but also by actually reducing the VAT bill itself.
To discuss the VAT Flat Rate scheme, and whether this may be suitable for your business, please call us on 01825 729453