Tax Tip Week 8 – Profit from VAT Flat Rate Scheme
There are several ways in which businesses can account for VAT, but for Professional Contractors and Freelancers that provide services with little business expenditure; choosing the Flat Rate scheme (FRS) may add money to your profits.
You are not obliged to be VAT registered if your turnover is or expected to be £68,000 and under (rate applied 1st May 2009) but there could be financial benefits.
The Flat Rate Scheme makes book keeping much easier as you only have to account for VAT on sales and you can even make some extra profit, sometimes as much as 3.5%, and if you are inside IR35 this is outside the deemed payment calculation.
See our detailed guidance for the VAT Flat Rate Scheme.