Latest news from HMRC is the Flat Rate Scheme for VAT is changing on 1st April 2017.
There will be a new VAT flat rate of 16.5%. It will apply to businesses in any sector, however, only if they have limited costs.
HMRC have said a limited cost trader will be defined as one whose VAT inclusive expenditure on goods is one of the following:
- less than 2% of their VAT inclusive turnover in their prescribed period
- greater than 2% of their VAT inclusive turnover but less than £1000 per annum if the prescribed accounting period is one year (if not one year then it will be the relevant proportion of £1000).
If you are using the Flat Rate Scheme or you are planning on joining the scheme then you will need to decide whether you should use this new rate.