The Flat Rate Scheme is a simplified method for calculating the VAT due to HMRC. It reduces some the administration effort involved with calculating VAT due for payment when compared to the normal method of accounting for VAT received from customers less VAT incurred on business purchases.
The flat rate method simply applies a % to your business turnover to calculate the VAT due to HMRC. The best part is that you then retain the VAT income received which is over and above the payment to HMRC.
This can be a nice little windfall for a number of businesses. Especially when you charge VAT at 20% and then pay over only 10% to HMRC.
To join the scheme your VAT turnover must be less than £150,000 per annum.
The flat rate scheme is perfect for most contractors and effectively allows you to supplement your contract income.
We have helped a vast number of businesses with their VAT registration and quarterly VAT returns, so if this is something that interests you then contact CheaperAccountant.co.uk