VAT flat rate scheme
It may be beneficial to register for the VAT flat rate scheme if you are expecting turnover, excluding VAT, in the next year to be under £150,000. This means that you keep the difference between your flat rate and the 17.5% [15% 1.12.08 to 31.12.09] you charge to your customers. Your flat rate can be 5.5% [5% 1.12.08 to 31.12.09] for wholesaling food to 13.5% [11.5% 1.12.08 to 31.12.09] for computer contractors depending on your trade or profession. You keep 4% to12% [3.5% to 10% 1.12.08 to 31.12.09] plus an extra 1% in the first year although this is all subject to Corporation Tax and is added back into your sales figure. You claim no other VAT except when you make capital purchases in excess of £2,000 when you can claim back this VAT specifically. Preparation of VAT forms is more simple but you need to monitor, separately, whether it continues to be beneficial to stay in the scheme.
