VAT FLAT RATE SCHEME

MAJOR CHANGES TO THE VAT FLAT RATE SCHEME


Your Tax Shop can announce that as of the 1st April 2017, the Flat Rate VAT Scheme

 (FRS) changed and HMRC introduced a new 16.5% rate which is likely to be less attractive to use for some businesses.

Who does it apply to?


This new rate will apply to businesses with limited costs. Here at Your Tax Shop based in Mossley and Ashton under Lyne we can help you to decide if you are what HMRC refer to as a limited cost trader.  A limited cost trader is defined as one whose VAT inclusive expenditure on relevant goods is less than 2% of their VAT inclusive turnover in a prescribed accounting period.

What are relevant goods?


Relevant goods must be used exclusively for the business. Examples include the following:

  • Stationery/office supplies
  • Stocks for a shop
  • Cleaning products
  • Software
  • Hair products for hair salons

It does not include:


  • Capital expenditure
  • Food or drink
  • Vehicle costs including parts and fuel
  • Payments for services such as accountancy fees, rent, advertising, sub-contractors
  • Anything provided electronically such as downloads of a magazines or software

Most consultancy type businesses will not purchase goods that are greater than 2% of turnover as generally most costs incurred will be for services.

What Your Tax Shop can do to help?

We believe you have 3 options:

  1. You can continue to use the FRS and pay VAT at 16.5%
  2. You can leave the FRS and switch to standard VAT scheme which would mean you can reclaim VAT on purchases and deduct this from the VAT received on your sales before you pay HMRC each quarter. In most cases this VAT reclaim would be higher using the standard method.
  3. If you are below the VAT threshold of £85,000 per annum you can de-register from VAT completely and stop charging VAT to your customers but you will not be able to reclaim VAT on purchases if you are not VAT registered

If you would like help or advice in understanding the best way forward for your business, please get in touch with one of the team at Your Tax Shop in Mossley and Ashton under Lyne.

VAT FLAT RATE SCHEME

MAJOR CHANGES TO THE VAT FLAT RATE SCHEME


Your Tax Shop can announce that as of the 1st April 2017, the Flat Rate VAT Scheme

 (FRS) changed and HMRC introduced a new 16.5% rate which is likely to be less attractive to use for some businesses.

Who does it apply to?


This new rate will apply to businesses with limited costs. Here at Your Tax Shop based in Mossley and Ashton under Lyne we can help you to decide if you are what HMRC refer to as a limited cost trader.  A limited cost trader is defined as one whose VAT inclusive expenditure on relevant goods is less than 2% of their VAT inclusive turnover in a prescribed accounting period.

What are relevant goods?


Relevant goods must be used exclusively for the business. Examples include the following:

  • Stationery/office supplies
  • Stocks for a shop
  • Cleaning products
  • Software
  • Hair products for hair salons

It does not include:


  • Capital expenditure
  • Food or drink
  • Vehicle costs including parts and fuel
  • Payments for services such as accountancy fees, rent, advertising, sub-contractors
  • Anything provided electronically such as downloads of a magazines or software

Most consultancy type businesses will not purchase goods that are greater than 2% of turnover as generally most costs incurred will be for services.

What Your Tax Shop can do to help?

We believe you have 3 options:

  1. You can continue to use the FRS and pay VAT at 16.5%
  2. You can leave the FRS and switch to standard VAT scheme which would mean you can reclaim VAT on purchases and deduct this from the VAT received on your sales before you pay HMRC each quarter. In most cases this VAT reclaim would be higher using the standard method.
  3. If you are below the VAT threshold of £85,000 per annum you can de-register from VAT completely and stop charging VAT to your customers but you will not be able to reclaim VAT on purchases if you are not VAT registered

If you would like help or advice in understanding the best way forward for your business, please get in touch with one of the team at Your Tax Shop in Mossley and Ashton under Lyne.

VAT FLAT RATE SCHEME

MAJOR CHANGES TO THE VAT FLAT RATE SCHEME


Your Tax Shop can announce that as of the 1st April 2017, the Flat Rate VAT Scheme

 (FRS) changed and HMRC introduced a new 16.5% rate which is likely to be less attractive to use for some businesses.

Who does it apply to?


This new rate will apply to businesses with limited costs. Here at Your Tax Shop based in Mossley and Ashton under Lyne we can help you to decide if you are what HMRC refer to as a limited cost trader.  A limited cost trader is defined as one whose VAT inclusive expenditure on relevant goods is less than 2% of their VAT inclusive turnover in a prescribed accounting period.

What are relevant goods?


Relevant goods must be used exclusively for the business. Examples include the following:

  • Stationery/office supplies
  • Stocks for a shop
  • Cleaning products
  • Software
  • Hair products for hair salons

It does not include:


  • Capital expenditure
  • Food or drink
  • Vehicle costs including parts and fuel
  • Payments for services such as accountancy fees, rent, advertising, sub-contractors
  • Anything provided electronically such as downloads of a magazines or software

Most consultancy type businesses will not purchase goods that are greater than 2% of turnover as generally most costs incurred will be for services.

What Your Tax Shop can do to help?

We believe you have 3 options:

  1. You can continue to use the FRS and pay VAT at 16.5%
  2. You can leave the FRS and switch to standard VAT scheme which would mean you can reclaim VAT on purchases and deduct this from the VAT received on your sales before you pay HMRC each quarter. In most cases this VAT reclaim would be higher using the standard method.
  3. If you are below the VAT threshold of £85,000 per annum you can de-register from VAT completely and stop charging VAT to your customers but you will not be able to reclaim VAT on purchases if you are not VAT registered

If you would like help or advice in understanding the best way forward for your business, please get in touch with one of the team at Your Tax Shop in Mossley and Ashton under Lyne.