In the next few weeks and months many small businesses will leave the VAT Flat Rate Scheme.
The reason why Flat Rate is going see an exodus is because of Low or Limited cost traders will see their Flat Rate increased to 16.5% in April.
So for example
If your sales are £5,000, the VAT is £1,000, total £6,000 x 16.5% = £990 VAT payable, so HMRC have let you keep £10!
It is highly likely that almost every trader will have input tax higher than £10 so therefore there is no point in being in the Flat Rate Scheme.
How to leave
You can choose to leave the scheme at any time.
To leave, write to HMRC and they will confirm your leaving date.
HM Revenue and Customs
77 Victoria Street
Ask your accountant if you need help.
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