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From flat rate VAT to regular VAT

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    From flat rate VAT to regular VAT

    Hi all,

    I sent a letter by post to HMRC notifying them my LTD wants to leave the FRVAT scheme. This was in May 2021.
    Havent heard from them since. I called the VAT help line and I was told my letter is received but is still in the backlog.
    However the HMRC bloke was quite sure my LTD can start charging normal VAT and reclaiming VAT without a confirmation from them.

    Do you know if this the case?

    #2
    Originally posted by gisp View Post
    Hi all,

    I sent a letter by post to HMRC notifying them my LTD wants to leave the FRVAT scheme. This was in May 2021.
    Havent heard from them since. I called the VAT help line and I was told my letter is received but is still in the backlog.
    However the HMRC bloke was quite sure my LTD can start charging normal VAT and reclaiming VAT without a confirmation from them.

    Do you know if this the case?
    AFAIK until you receive confirmation from them, you're still on FRS

    Comment


      #3
      Originally posted by gisp View Post
      Hi all,

      I sent a letter by post to HMRC notifying them my LTD wants to leave the FRVAT scheme. This was in May 2021.
      Havent heard from them since. I called the VAT help line and I was told my letter is received but is still in the backlog.
      However the HMRC bloke was quite sure my LTD can start charging normal VAT and reclaiming VAT without a confirmation from them.

      Do you know if this the case?
      you should always have been charging 'normal' VAT.
      FRS is only about how much you pay HMRC in your return.

      Question for Craig@Clarity though. If the OP exceeds £150k turnover would he still have to wait for HMRC response before changing?
      See You Next Tuesday

      Comment


        #4
        Originally posted by Lance View Post

        Question for Craig@Clarity though. If the OP exceeds £150k turnover would he still have to wait for HMRC response before changing?
        The £150k threshold is the criteria if you want to join the FRS. Once you're on it, the threshold is £230k with various scenarios before you're kicked off it or you have to leave.

        Comment


          #5
          I was under the impression I have to wait for their notification of my FRVAT scheme's final date. However the guy was sure I just need to notify them I am leaving the scheme.

          Comment


            #6
            Originally posted by gisp View Post
            I was under the impression I have to wait for their notification of my FRVAT scheme's final date. However the guy was sure I just need to notify them I am leaving the scheme.
            If that’s the case and you still want to change, I would put away the monetary difference until you receive written confirmation of that fact - you may need to pay the money back if there’s an initial difference in your favour.
            "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
            - Voltaire/Benjamin Franklin/Anne Frank...

            Comment


              #7
              When I switched, I just informed HMRC of the effective date (aligned to my reporting quarters) and then got on with it. I never received any form of acknowledgement. This was several years ago, when the changes to the FRV scheme were coming into force that made it a less attractive proposition.
              Click here to come to the CUK Xmas do on 10 Dec! Meet your board heroes!

              Comment


                #8
                Section 12 of this guide states that you must not account for VAT using the scheme after your leaving date, even if you've not heard back from HMRC.

                https://www.gov.uk/government/public...sses#section12
                Click here to come to the CUK Xmas do on 10 Dec! Meet your board heroes!

                Comment


                  #9
                  Originally posted by ladymuck View Post
                  Section 12 of this guide states that you must not account for VAT using the scheme after your leaving date, even if you've not heard back from HMRC.
                  Yup, our understanding has always been that you're not asking HMRC's permission to use the FRS (or leave it as the case may be), you're telling them that's what you're doing. Hopefully you've got a copy of the letter sent (even if just a soft PDF copy) as evidence you did tell them. HMRC's customer service across most departments is so behind you may well never hear. Just act like you're not on the FRS anymore, irrespective of if/when HMRC write back confirming their acknowledgement of your letter.

                  Comment


                    #10
                    Thanks all. I was pointed to the same document (notice 733). So it seems I am OK to stop using FRS.
                    There was a full new VAT period after the period in which I said I was leaving the scheme, so I should be on a clean slate.

                    Since I now work inside IR35 on my main contract I pay not VAT. However my second contract (20 hours per month) with a party outside UK is still running. Should I expect any problems when I reclaim VAT on receipts related to this activity? In effect I will get money back - any VAT inspection maybe.

                    Comment

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