Leaving the flat VAT rate scheme criteria

[RockyBalboa]

When HMRC spot that your turnover has exceeded £230k based on your past VAT returns, you'll get a letter from them telling you that your Company needs to leave the flat rate scheme.

They usually keep you on the flat rate scheme until the end of your existing VAT period. Then you will need to revert to the standard scheme after this.

Or you can just write to them and state this is a one off due to X Y Z reason, as I did.. and as long as it's genuine (your next annual figure drops below the threshold), all is good.

[malvolio]

More likely "no one here is troubled by a £230,000 turnover" which would seem to be a day rate of £970+ assuming 4 weeks holiday. There will be some on that, but they pay someone else to worry about the above.

Or two fee earners on £485? Or three on £323.33...?

[earningacrust]

When HMRC spot that your turnover has exceeded £230k based on your past VAT returns, you'll get a letter from them telling you that your Company needs to leave the flat rate scheme.

They usually keep you on the flat rate scheme until the end of your existing VAT period. Then you will need to revert to the standard scheme after this.

[GillsMan]

Turnover is normally on invoices raised whether paid or not. However for VAT box 6 it can be either invoices raised or money received. There's no declaration for the method chosen and the rules do not restrict switching method whenever it suits.

Ah, OK, thanks for the clarification!

[Lumiere]

Generally speaking HMRC base this on your last 4 returns and the box 6 figures contained within as they will not know when you actually raise an invoice or receive payment, the same goes for if you are using normal VAT rules or cash accounting as well.

as such if the box 6 figures on your last 4 returns exceed £230,000 I would expect a letter from HMRC saying you have been removed from the FRS.

Makes sense, but how do they split it to before/after effective date in the period. E.g. effective date = 5 dec, VAT return covers Oct-Dec. There is only sum amount in the return.

[Contreras]

It says if your turnover reaches (or is expected to reach) £230,000. That's your clue. Turnover. So you're going on invoices paid (i.e. money received), not invoices raised.

Turnover is normally on invoices raised whether paid or not. However for VAT box 6 it can be either invoices raised or money received. There's no declaration for the method chosen and the rules do not restrict switching method whenever it suits.

[Kenny]

FRS criteria

Hi

Generally speaking HMRC base this on your last 4 returns and the box 6 figures contained within as they will not know when you actually raise an invoice or receive payment, the same goes for if you are using normal VAT rules or cash accounting as well.

as such if the box 6 figures on your last 4 returns exceed £230,000 I would expect a letter from HMRC saying you have been removed from the FRS.

If you are aware you are hitting or exceeding the threshold you should voluntarily remove yourself at this point.

[GillsMan]

It says if your turnover reaches (or is expected to reach) £230,000. That's your clue. Turnover. So you're going on invoices paid (i.e. money received), not invoices raised.

As to your other question, it's the anniversary of your joining the Flat Rate Scheme.

[PerfectStorm]

No one knows ?

More likely "no one here is troubled by a £230,000 turnover" which would seem to be a day rate of £970+ assuming 4 weeks holiday. There will be some on that, but they pay someone else to worry about the above.

[Lumiere]

Have you tried ringing your accountant or the HMRC VAT helpline and hear it from the horse's mouth? I doubt that many here would have encountered this situation to enable them to speak from experience.

It is unlikely that my accountant have had this experience either, anyway he is on holiday at the moment.

I don't really like speaking to HMRC if I don't have to.
It says that I would need to provide VAT registration number and postcode when calling that helpline, although I have nothing to hide, I don't want to raise any red flags by accident.

[sal]

Have you tried ringing your accountant or the HMRC VAT helpline and hear it from the horse's mouth? I doubt that many here would have encountered this situation to enable them to speak from experience. And relaying on some stranger's interpretation of the regulation when it comes to tax affairs (especially VAT) is not a good idea).

[stek]

No one knows ?

Or dares to Dream......

[Lumiere]

No one knows ?

[Lumiere]

HMRC:

on the anniversary of joining, your turnover in the last 12 months was more than £230,000 - or you expect it to be in the next 12 months

Could someone explain how to calculate it, is it determined by the date when invoices were issued or paid ?

What does anniversary of joining mean, is it the same as the effective date from the VAT certificate or it would be the date of joining flat VAT scheme?

E.g. my VAT certificate states that its effective date is 5 Dec, I issue my invoices on the 1st and they normally get paid on the 15th. So, for the past year, do I need to sum up all invoices paid between 05 Dec 2013 and 05 Dec 2014 inclusive to get the turnover figure ?

I assume I need to do this check only on the anniversary of joining, rather than every month during the year.

Thanks