VAT Flat Rate Scheme Changes on 1st April 2017
Who needs to know when I go self-employed?
When must I register for VAT?
Where can I find all the tax and CGT rates?
I'm three years late with my tax returns, can you help?
I'm often offered cash in return for not charging VAT, is this wise?
I've not had a VAT inspection for over five years. Why?
VAT Flat Rate Scheme Changes on 1st April 2017

VAT Flat Rate Scheme for small businesses turning over under £150,000. HMRC have tightened the rule surrounding the scheme.

If you are a low cost goods trader then you could be put on a new rate of 16.5%. This means that the VAT you pay would be 16.5% of turnover.

Who needs to know when I go self-employed?

You must notify the Inland Revenue (£100 penalty if not done within 3 months of commencing to trade: form CWF1 which asks for some basic information.) You must start keeping complete records of all your business income and expenditure so we (you and I) can work out your taxable profit at the end of the accounting period. You must keep all records for six years.

For more details visit the Revenue website Starting up in Business pages and the form CWF1.

When must I register for VAT?

All VAT regulations are complex, but in broad terms you must register when your turnover exceeds £85,000 pa (as we write). The difficulty arises if you exceed the limit without registering promptly. HMRC will go back and claim 20% VAT plus raise a penalty. See the HMRC website here.

Where can I find all the tax and CGT rates?
I'm three years late with my tax returns, can you help?

I will normally need bank statements covering the whole period, plus details of business income and business expenditure.

I'm often offered cash in return for not charging VAT, is this wise?

The Revenue keep a sharp eye on businesses that tend to like cash deals: the motor trade, antiques, take-aways and market traders are the obvious ones. They also know what margins all trades enjoy so if they should ever do an investigation and your figures do not benchmark with the known norm, then you may be taken to the cleaners. Best not too I think.

I've not had a VAT inspection for over five years. Why?

A number of reasons. Maybe your paperwork is always on time, you run a nice clean business, or you’re not engaged in a sector subject to query, ie the same businesses as those above. You are more likely to have frequent visits if:

  • you’ve failed to submit VAT returns on time on a regular basis
  • referrals from another VAT office that one of your suppliers is not dealing with VAT correctly
  • abnormal trading patterns

A sudden drop in the amount of tax being declared, or an unexpected claim for VAT, can also trigger an inspection. During the inspection your systems will be examined to establish the full scope of the VAT position. Advice will be given to tighten up and probably raise an assessment.

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