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The Flat Price Scheme was introduced as an simple way for tiny businesses to calculate their VAT liability.
The Flat Rate VAT scheme is offered to firms with a taxable turnover below 150,000 excluding VAT (also exempt and non-taxable sales ought to be below 37,500).
Beneath the flat price scheme, you just keep a percentage of the VAT charged to your buyers. The percentage you maintain varies based upon which market you are in.
You ignore VAT on your purchases, the VAT you spend simply becomes a expense. Eg If you devote ten + VAT on stationery, the cost of that stationery becomes 11.75.
The flat rate scheme does let you to reclaim the VAT on 'large' capital items - exactly where you spend far more than two,000 you can reclaim the VAT on that item.
Should I be on the flat rate scheme?
As you claim a percentage of sales, those with higher sales stand to advantage far more.
These with low purchases (therefore paying tiny in reclaimable input tax) also stand to achieve from the scheme.
For example A organization 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 8,068 per annum by switching to the Flat Rate VAT scheme.
To see how significantly you may well 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 advice line on 0845 010 9000, who will be capable to take your VAT registration number and relevant particulars on the phone, following which you will be registered soon after approximately 21 days.
Alternatively, you can download the scheme application kind from HMRC .
How do I make a decision which sector my organization falls into?
If your company has sales in two or much more sectors, you must apply the percentage suitable to the primary business activity, as measured by your sales.
Some sectors are clearer than others. The difference in between "other enterprise solutions" and "services not elsewhere specified" is far from clear. If you telephone HM Income & Customs for guidance, make positive you hold a note of the name of the particular person you speak to and the date of the get in touch with. discount ppi calculator
