VAT – Flat Rate Scheme Changes

Do you use the VAT Flat Rate Scheme?

If so new rules effective from April 2017 could leave you out of pocket.

If you are what HMRC describe as a “limited cost trader” you will be forced to use a flat rate scheme percentage of 16.5%, regardless of what type of business you run. A limited cost trader is a business which has expenditure on goods that is either:

  • Less than 2% of flat rate turnover, or
  • More than 2% of turnover, but less than £1,000 a year.

When we look at expenditure under these rules, only expenditure on goods can be included, and even then spending on capital items (assets), food or drink that will be consumed by your business or employees, and vehicles, vehicle parts and fuel for all businesses other than transport providers has to be excluded.

To discuss how these rules could affect you please contact Faye Armstrong on 01228 530913 or email faye@doddaccountants.co.uk

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