[britishwill]

Hi Everyone

I joined the flat rate scheme 2 years ago and as far as I can see we are no longer eligible to stay in the scheme and my accountant has confirmed this. I am gutted about this as from what I can work out will cost be another £1500 per quarter.
Anyone find it actually works for them, or am I missing a trick.
Cheers

[jk999]

Flat rate scheme what's that

[8weekly]

Hi Everyone

I joined the flat rate scheme 2 years ago and as far as I can see we are no longer eligible to stay in the scheme and my accountant has confirmed this. I am gutted about this as from what I can work out will cost be another £1500 per quarter.
Anyone find it actually works for them, or am I missing a trick.
Cheers

I thought this but If you spend more than 2% of your turnover on goods you can stay in:

New rules from 1 April 2017
You’ll be classed as a ‘limited cost business’ if your goods cost less than either:

2% of your turnover
£1,000 a year (if your costs are more than 2%)
This means you’ll pay a higher rate of 16.5%. You can calculate if you need to pay the higher rate and work out which goods count as costs.

If you aren’t a limited cost business, continue to use your business type to work out your flat rate.

My reading is we stay on flat rate until we go over £230,000.

[8weekly]

Doing a few sums quickly, we will bounce in and out on a quarterly basis, but over a year last year we spent about 2.5%. I think you need to be canny with buying things to make sure you achieve just over 2% every quarter. So if you're nowhere near, buy a pole or some resin or filters. If you turnover £150k you need to spend £750 a quarter or £250 a month. If you don't it will cost an extra £1,600 or so in VAT.

[britishwill]

Interesting reading 8 weekly, thank you

[8weekly]

You can include electicity & gas.. If you're on a meter you can include water I think. Some things need checking.

[Susan Dean (1stclean)]

Doing a few sums quickly, we will bounce in and out on a quarterly basis, but over a year last year we spent about 2.5%. I think you need to be canny with buying things to make sure you achieve just over 2% every quarter. So if you're nowhere near, buy a pole or some resin or filters. If you turnover £150k you need to spend £750 a quarter or £250 a month. If you don't it will cost an extra £1,600 or so in VAT.

would the lease money on a van count ? i

[8weekly]

Doing a few sums quickly, we will bounce in and out on a quarterly basis, but over a year last year we spent about 2.5%. I think you need to be canny with buying things to make sure you achieve just over 2% every quarter. So if you're nowhere near, buy a pole or some resin or filters. If you turnover £150k you need to spend £750 a quarter or £250 a month. If you don't it will cost an extra £1,600 or so in VAT.

would the lease money on a van count ? i

I think not. I am confused over vehicles to be honest because on the one hand you can't include motoring costs but I read somewhere that a van was.

But leased vans probably not:

Examples of relevant goods
This isn’t an exhaustive list:

stationery and other office supplies to be used exclusively for the business
gas and electricity used exclusively for your business
fuel for a taxi owned by a taxi firm
stock for a shop
cleaning products to be used exclusively for the business
hair products to use to provide hairdressing services
standard software, provided on a disk
Examples of supplies that aren’t relevant goods
This isn’t an exhaustive list:

accountancy fees, these are services
advertising costs, these are services
an item leased/hired to your business, this counts as services, as ownership will never transfer to your business
food and drink for you or your staff, these are excluded goods
fuel for a car this is excluded unless operating in the transport sector using your own, or a leased vehicle
laptop or mobile phone for use by the business, this is excluded as it is capital expenditure see paragraph 15.1
anything provided electronically, for example a downloaded magazine, these are services
rent, this is a service
software you download, this is a service
software designed specifically for you (bespoke software), this is a service even if it is not supplied electronically

https://www.gov.uk/government/publications/vat-notice-733-flat-rate-scheme-for-small-businesses/vat-notice-733-flat-rate-scheme-for-small-businesses#para4-4

[8weekly]

15.1 Definition of ‘capital expenditure goods’ on which input tax can be claimed
Normally, capital goods are those goods which are bought to be used in the business but are not used up by it, except through normal wear and tear over a number of years - for example a van, a computer or a bottling machine but not the fuel, printer paper or bottles that go into them.

Capital expenditure goods in the Flat Rate Scheme are capital goods that would fall into the above definition, but also specifically exclude any goods bought to:

resell
incorporate into other goods for onward supply
consume (or completely use) within one year
generate business income by being leased, let or hired
goods covered by the capital goods scheme (see paragraph 15.6)
Nothing in this section allows a business using the Flat Rate Scheme to reclaim VAT on goods which it would not be able to claim under the normal VAT rules.