Flat rate tax - last question for a while - Contractor UK Bulletin Board

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malvolio replied

28 October 2011, 07:50
Originally posted by beardedfool View Post

Sorry, don't want to flood the forum but this is genuine interest.

If the flat rate for VAT makes sense, as I understand it, then a company that is more likely to receive more VATable invoices (whether for physical items or services) should get a lower numerical percentage than a services industry? Is that how it works?

HM Revenue & Customs: Flat Rate Scheme for VAT

As a PM. Should I just declare myself a management consultancy, rather than an IT consultancy and save myself 0.5% of my VAT (I know, it's little but I'm trying to understand the logic, I'd happily pay it but surely IT consultants pay a little more for equipment and outsource a lot more to 3rd parties).

FRS is meant to help small business with lots of items, often at different rates: think grocers and pubs rather than consultancies.The rates are set to try and match the net VAT turnover for the business in question. Most jobbing IT contractors wind up on the 14% band

You have to use the most approriate SIC code or risk a serious slap from the VAT man for incorrectly declaring your VAT position. But if you have a lot of input VAT, either by buying material for resale or high working expenses, you may be better off on traditional VAT anyway.

General word of advice: the various rules around taxation are there for a reason (well, apart from IR35 of course) and are not to be buggered about with unless you are really certain you know what you're doing. Stick to the middle ground or risk painful, expensive and potentially damaging investigations.
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beardedfool started a topic Flat rate tax - last question for a while

27 October 2011, 23:34
Flat rate tax - last question for a while

Sorry, don't want to flood the forum but this is genuine interest.

If the flat rate for VAT makes sense, as I understand it, then a company that is more likely to receive more VATable invoices (whether for physical items or services) should get a lower numerical percentage than a services industry? Is that how it works?

HM Revenue & Customs: Flat Rate Scheme for VAT

As a PM. Should I just declare myself a management consultancy, rather than an IT consultancy and save myself 0.5% of my VAT (I know, it's little but I'm trying to understand the logic, I'd happily pay it but surely IT consultants pay a little more for equipment and outsource a lot more to 3rd parties).
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