The flat rate scheme is a way of making your accounting and VAT records easier to keep, by allowing you to apply a fixed percentage to your gross sales to calculate the VAT due. The percentage that you apply depends on the sector which your business falls into.
Benefits of the flat rate scheme
It will simplify your book keeping but it may result in higher or lower VAT liabilities than those calculated in the normal way.
You do not claim back input VAT on your purchases as an allowance for that is built into the flat rate designated for your business sector.
There are special rules for when you buy high value capital goods to enable you to recover the input VAT on these purchases.
Can I join the flat rate scheme?
The scheme is available for businesses with sales of no more than £150,000 a year.
Please contact us if you would like more information on the flat rate scheme for VAT.