Changes in Flat Rate Tax Scheme 1/4/17

[chopper]

Seriously, wouldn't you be OK selling the £1000 item for say £300 plus vat. This way you shouldn't have any trouble making the sale and you still make a 300 pound profit after tax?

Or am I misunderstanding the system?

I think you understood it correctly. Ignore everybody else. I am more than happy to assist you in your scheme. But why stop at £1000?

You should buy, say, a £30,000 car and sell it to me for £9000 + VAT. Instant £9000 profit for you.

Winner winner, chicken dinner.

[teapot418]

I thought that if you do it right, you spend a thousand, save a thousand in tax, then sell for three hundred, giving you a sweet 300 quid profit?

You make money, your customer gets a good deal, your enemies miss out on the extra tax. What's not to like?

I think what hb is getting at:

In the context of the FRS.

You buy your 2K of 'stuff' and sell it for £600. Your loss is £1400.

On the FRS, 100K turnover

100*1.2 * .165 = 19.8

100*1.2 * .145 = 17.4

Difference 2.4K, so you're 1K "up" on not buying and selling your goods at a loss.


But if 1K is that important, then you're probably NCOTBAC.

[Potato]

I'd be interested to know if anyone is switching away from the flat rate scheme in light of these changes.

As you'll now be claiming 20p back for every £100 your invoice instead of £2.60

I suspect I can make more of a saving from my purchases than I can save on this scheme.

[Lance]

I think what hb is getting at:

In the context of the FRS.

You buy your 2K of 'stuff' and sell it for £600. Your loss is £1400.

On the FRS, 100K turnover

100*1.2 * .165 = 19.8

100*1.2 * .145 = 17.4

Difference 2.4K, so you're 1K "up" on not buying and selling your goods at a loss.


But if 1K is that important, then you're probably NCOTBAC.

and this is likely to be caught by the GAAR rules https://www.gov.uk/government/public...ti-abuse-rules

[hugebrain]

and this is likely to be caught by the GAAR rules https://www.gov.uk/government/public...ti-abuse-rules

According to that link GAAR does not apply to VAT.

[TheCyclingProgrammer]

and this is likely to be caught by the GAAR rules https://www.gov.uk/government/public...ti-abuse-rules

I don't think it would, however I don't think HMRC need any special legislation to try and tackle these blatant workarounds - for purchases to count they need to be wholly and exclusively for business purposes and it wouldn't be hard IMO for HMRC to challenge these arrangements on that basis.

I'm sure we'll know more after the budget when I expect the final legislation will be published.

[SueEllen]

I'd be interested to know if anyone is switching away from the flat rate scheme in light of these changes.

I have already switched due to how my VAT quarters are aligned.

[MeMeMe1966]

Tell me the flaw in this plan please

Hi,

I can't stand the thought of handing over an extra 4K.

So 160k turnover at 14% = 22.4k

turns into 160K turnover at 16.5% = 26.4k

Difference in my pocket (obvs less corp tax is 4K)

I have virtually no input vat that i can think of, so i'm not going to be recouping this 4K hit by moving onto the standard method.

If I buy 3.2K worth of software then I hit the 2% vatable expenses and at least I've received some benefit from the change. I'm thinking that software training packages to skill up can be wholly and exclusively part of the business? i think it would count as relevant goods and i believe its vatable?

is there a flaw in this?

[SueEllen]

Hi,

I can't stand the thought of handing over an extra 4K.

So 160k turnover at 14% = 22.4k

turns into 160K turnover at 16.5% = 26.4k

Difference in my pocket (obvs less corp tax is 4K)

I have virtually no input vat that i can think of, so i'm not going to be recouping this 4K hit by moving onto the standard method.

If I buy 3.2K worth of software then I hit the 2% vatable expenses and at least I've received some benefit from the change. I'm thinking that software training packages to skill up can be wholly and exclusively part of the business? i think it would count as relevant goods and i believe its vatable?

is there a flaw in this?

Training is services not goods.

The VAT man has a fraud department so I wouldn't try it.

[MrMarkyMark]

Training is services not goods.

The VAT man has a fraud department so I wouldn't try it.

And again people wonder why people we are tax avoiding scum