The VAT Flat Fee Plan is designed for organizations with a turnover of considerably less than £150,000 who want to simplify their VAT accounting. as follows

You basically estimate your VAT payments as a percentage of your whole, VAT-inclusive turnover. A single downside to the VAT Flat Fee Scheme, nonetheless, is that you can not reclaim VAT on buys, as an common is taken into account in calculating the flat charge share that you use.

You may possibly be in a position to assert back the VAT on funds assets well worth far more than £2,000 -you should question if you are uncertain.

The VAT Flat Rate Plan can reduce how much time you need to spend on accounting and working out your VAT.

Even though you nevertheless want to show a VAT quantity on every single of your revenue invoices, you do not need to have to record how significantly VAT you demand on every single sale in your accounts, and the same applies for the VAT you shell out on your buys.

What’s far more, if you are newly VAT registered, you can reduce your flat price by one% until finally the day before the 1st anniversary of your VAT registration.

You Can not Be part of The VAT Flat Rate Scheme If…

You had been in the scheme, and still left in the preceding twelve months
You are, or have been inside the previous months, both eligible to join an present VAT team, or registered for VAT as a division of a more substantial company
You use a single of the margin scheme for 2nd-hand items, art, antiques and collectibles, the Tour Operators’ Margin Plan, or the Cash Items Scheme
You have been convicted of a VAT offence or charged a penalty for VAT evasion in the final year
Your company is intently associated with yet another company

The Pros

You never have to record the Value Extra Tax you demand on each sale and buy
Very first yr price cut if you happen to be recently Value Added Tax registered
Less policies to comply with
Significantly less possibility of blunders
Certainty – you will always know what share of your taking you will have to spend to HMRC

The Downsides

You can not reclaim VAT on buys
Probably would not be the very best choice for you if you already make a whole lot of zero-rated or exempt sales
Perhaps wouldn’t be the very best option for you if you routinely receive a VAT repayment underneath regular VAT accounting

And there you have it the pro’s and con’s of the VAT Flat Fee Plan!

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