If you are part of a VAT group, or are eligible to join an existing VAT group, then you cannot use the Flat Rate Scheme. If you become eligible to join an existing VAT group after you join the scheme, then you must leave the scheme with effect from the date you become eligible.
Do you pay more VAT if you are based in Northern Ireland?
Also, as the flat rates are averages, you may pay more VAT on the Flat Rate Scheme than you would on normal accounting. If you use the Flat Rate Scheme, you do not recover input tax or VAT on imports or acquisitions, if your business is based in Northern Ireland.
How does the flat rate scheme work for Northern Ireland?
If you use the Flat Rate Scheme, you do not recover input tax or VAT on imports or acquisitions, if your business is based in Northern Ireland. This is because the flat rates are calculated to represent the net VAT you need to pay to HMRC. In other words, an allowance for input tax is built into the flat rates.
How much VAT is due under the reverse charge?
It should also clearly state how much VAT is due under the reverse charge, or the rate of VAT if the VAT amount cannot be shown, but the VAT should not be included in the amount charged to the customer. The client should record the sale in Box 6 only on their VAT return.
When to leave the flat rate tax scheme?
You have to leave the flat rate tax scheme if, on the anniversary of joining, your turnover in the past 12 months was more than £230,000 (including VAT) or if you expect it to be in the coming 12 months. Alternatively, your business may wish to cancel its VAT registration if your turnover (excluding VAT) falls below £83,000.
Is the flat rate scheme right for your business?
There is also the opportunity to earn money from the flat rate scheme. “For example, if you charge 20% VAT and you pay a flat rate percentage of 16.5% on gross sales, you keep the difference. “In addition, if you are a new business, you can benefit from an extra 1% discount in your first year of trading.”
