Flat rate VAT scheme - limit of 150k

[FreeAgent]

Hi,

I just finished my first year of trading as a LTD co (used to use a umbrella earlier, while I was figuring out if I wanted to be a free lancer). I registered for FRS for VAT as my predicted earnings were going to be well short of the 150k mark.

Half way through the year, an unusual set of circumstances ( people leaving the team, due to tough, sometimes unreasonable work conditions / pressures), I got a rate hike of 20%. Also, did a lot of additional days working upto 28 days a month and no holidays. The upshot of all that was I breached the 150k limit by about 6k - in normal circumstances I will not be breaching this limit - as I have no intentions of working 28 days a month, its unsustainable and I don't want to spend my life staring at a monitor and on conference calls.

I am concerned that I no longer qualify for the flat rate VAT scheme - I wrote to my accountant and he responded saying I need not be worried as I have not crossed 230k. I think HMRC had put a limit of 150 k on the first year.

My decision to join the FRS was based on reasonable estimations - day rate * 22 days a month * 12 months - that will still leave me head room with holidays etc.

Should I leave FRS? I am not sure if my accountant understands the rules correctly. I want to stay in FRS as it makes accounting easy and as I am 'code monkey' it gives me some small profits.

Any advice would be much appreciated.

Thanks,

FA

[Craig@Clarity]

You should be fine. You would have already joined the flat rate scheme based on your estimated turnover being less than £150k excluding VAT, so as long as your turnover then doesn't go over £230k, you are fine to stay on the scheme.

[FreeAgent]

You should be fine. You would have already joined the flat rate scheme based on your estimated turnover being less than £150k excluding VAT, so as long as your turnover then doesn't go over £230k, you are fine to stay on the scheme.

Many thanks. Its just that the HMRC guidelines are so poorly worded - or maybe I am not a trained lawyer that it led me to believe that if you end up making more than 150k in your first year - HMRC will assume that you are pulling a fast one and kick you out of FRS - and also throw in some penalties for a few laughs.