VAT Flat Rate Changes – Implications for Low – Cost Traders

VAT Flat Rate Changes – Implications for Low – Cost Traders April 2017 saw changes which mean that small limited companies who have low annual costs face a higher VAT liability if they are using the flat rate scheme (FRS). Unlike the standard VAT scheme, the FRS makes calculations simpler for users. VAT liability would be calculated by applying a fixed percentage to the turnover of a company. The percentage differs dependent on the trade of the company. For example: Client invoice = £1000 + 2-% VAT You owe HMRC 14.5% x £1200 = £174   Those using the FRS
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