Changes in Flat Rate Tax Scheme 1/4/17

[strawberrysmoothie]

Hi,

I don't did a quick search and I couldn't see a discussion about this. So if I'm wrong, point me in the right direction.

As we are all aware the new rules regarding flat rate tax come into force on 1/4/17. I've been paying flat rate at 12% every quarter but the new rules mean I will have to 16.5% instead - which is a pretty big leap in my quarterly VAT bill.

I had a chat with my accountant I've got the option of no longer registering for VAT, forking 16.5 a quarter, or going on standard VAT scheme and off-setting my quarterly bill from my expenses.

My question is, and I know everyone has different circumstances, is how are they tackling this situation. As I am confused about the best option.

thanks in advance.

[radish2008]

12% ? what sector are you in ?

[eek]

12% ? what sector are you in ?

Not one where its due to increase to 16.5%.... Something isn't right here....

[northernladuk]

Oh dear oh dear.....

Any other activity not listed elsewhere 12
Boarding or care of animals 12
Business services not listed elsewhere 12
Estate agency or property management services 12
Investigation or security 12
Laundry or dry-cleaning services 12

I'd be guessing Business service not listed elsewhere......

Wouldn't be too much of a hit if you'd been

Computer and IT consultancy or data processing 14.5

EDIT : Accounting question surely? Can a Mod move please?

[chopper]

Oh dear oh dear.....

Any other activity not listed elsewhere 12
Boarding or care of animals 12
Business services not listed elsewhere 12
Estate agency or property management services 12
Investigation or security 12
Laundry or dry-cleaning services 12

I'd be guessing Business service not listed elsewhere......

Wouldn't be too much of a hit if you'd been

Computer and IT consultancy or data processing 14.5

EDIT : Accounting question surely? Can a Mod move please?

If an accountant has previously suggested to go onto a catch all FRS rate rather than the appropriate one, then I'm not sure that accountant's advice can be relied upon.

[BigRed]

Be aware the flat rate is on the gross, not net, so income of £100+vat=£120, under the flat rate scheme you are currently paying 12% of £120, not £100. At 16.5% you will be paying £19.80, so saving £20p per £100 but not able to claim VAT back on anything under single expenditure of £2,000. You will probably find just claiming back vat on your accountants bill will save you money if you drop out of the fixed rate scheme.

[northernladuk]

If an accountant has previously suggested to go onto a catch all FRS rate rather than the appropriate one, then I'm not sure that accountant's advice can be relied upon.

Quite possibly but they also rely on information from their client. We've had people come on here convinced they are something else and we've had to correct them. Normally it's the hardware one but we've had some odd ones.

[pr1]

Lots of engineers that aren't specifically (/explicitly) civil or structural use the 12% business not listed.

HMRC have had a few cases of getting people to change it and pay back the difference, with mixed results

[uk contractor]

Flat Rate scheme is getting even harder to qualify for anymore HMRC are cracking down on it & seem reluctant to even hand out the registrations. For the few measily % it adds ontop I wonder if its even worth it anymore just pass the minor rate rise onto the client direct!

[sal]

Flat Rate scheme is getting even harder to qualify for anymore HMRC are cracking down on it & seem reluctant to even hand out the registrations. For the few measily % it adds ontop I wonder if its even worth it anymore just pass the minor rate rise onto the client direct!

Am I the only one having troubles understanding this? I would like to see you attempting to pass rate increase to the client blamed on VAT FRS rules change, you have better chances of blaming brexit and falling £ causing your holiday in France/Spain costing you more...