The Lemon Fool

Are all the PSCs going to de-register for the Flat Rate scheme now that the rate is increasing to 16.5%? The flat rate is paid on the gross so £1000+VAT is £1,200 * 16.5% giving £198 for the taxman and £2 for you. As you can't reclaim any VAT under the Flat Rate scheme unless it is an exceptional expenditure of £2,000 or more, just being able to claim back the VAT on my accountants fee would save me money

That was no doubt the intention of the change...

Either stay on FRS and lose money or move back to standard rate and pay exactly what's due.

No more marginal gains each quarter

What about not registering for VAT.

If you don't charge it do you still pay it?

rustycables wrote:What about not registering for VAT.

If you don't charge it do you still pay it?

Yes, you still pay it. If you go to Currys and buy a new PC they charge VAT, you can't tell them not to, it's they who have to charge it so you have to pay it. If you're not registered then you can't claim it back. I think I might deregister, I don't buy enough to make it worthwhile really.

Mel

rustycables wrote:What about not registering for VAT.

If you don't charge it do you still pay it?

Well not to HMRC, but you can't recover what you have paid out on expenses, so you have to do the sums.

Plus some business customers are not to happy about dealing with a contractor who is not VAT registered.

Slarti

Slarti wrote:

rustycables wrote:What about not registering for VAT.

If you don't charge it do you still pay it?

Well not to HMRC, but you can't recover what you have paid out on expenses, so you have to do the sums.

Plus some business customers are not to happy about dealing with a contractor who is not VAT registered.

Slarti

I am considering unregistering and putting my rates up.....

Your second point is one of the reasons I registered so I will need to look into that. What a pain it is.

Mel

According to my accountant, the flat rate change only affects businesses whose expenses are 2% or less than revenue. Rather than miss out on the profit potential in the FRS, couldn't you increase your expenses?

HMRC are wise to that one
They are also redefining qualifying expenditure for FRS.

You might find this link useful.
http://www.intouchaccounting.com/resour ... mber-2016/

deadeyedjacks wrote:HMRC are wise to that one
They are also redefining qualifying expenditure for FRS.

You might find this link useful.
http://www.intouchaccounting.com/resour ... mber-2016/

"We currently understand that qualifying expenditure excludes the purchase of capital assets, food and drink consumed by the business or employees (subsistence) and motoring costs. "

Well, that's everything! And I'm under the limit anyway, so over £3k pa worse off. Two options, go back to 'not flat rate', or deregister.

Mel

Another option would be to increase the rate you charge?

StepOne wrote:Another option would be to increase the rate you charge?

Not so easy in the current financial climate.

Slarti

With the flat-rate: you pay a fixed VAT to HMRC. you keep the difference between what you charge to your customers and pay to HMRC. you can not reclaim the VAT on your purchases - with the exception of certain capital goods of more than £ 2,000.

Source:-DNS Accountants