Funnily enough we find most business owners don’t spend their time thinking about different VAT schemes.
But… service-based businesses (in particular) really should give the flat rate scheme some thought. If you have relatively low costs then it can be a money saver when compared with the standard scheme, as well as making your VAT returns slightly simpler.
The scheme allows businesses to pay over a fixed percentage of your sales to the VAT office, while restricting you from claiming the purchase tax (input VAT) on your trading expenses, bar the exception for certain capital goods.
Percentages differ across industries and some businesses will benefit more than others.
There are lots of factors to consider when choosing which VAT scheme is applicable and most effective for your business, so do speak with your business advisor to help you appraise these.
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