VAT - starting rate on the Flat Rate Scheme
As an incentive to new VAT registered businesses to consider using the Flat Rate Scheme, H M Revenue & Customs allow a 1% reduction in the flat rate percentage for your type of business for one year. This can be a significant benefit for newly registered traders. If your turnover including VAT is £117,500 in the first year the 1% will be worth a reduction in your VAT payments of £1,175.
Please note that this reduction is only available in the twelve months following registration for VAT. It is not available for the first twelve months you decide to convert to the Flat Rate Scheme if you are an existing VAT registered business. Unless - if say you registered for VAT on the 1 January 2010 and decided to apply to join the Flat Rate Scheme on the 1 April 2010, you could apply the 1% reduction in the rate applicable to your business until 31 December 2010; for the nine months until your first anniversary of registration is reached.
For smaller businesses who qualify for the lower flat rate percentages, the scheme can be cash flow positive. If you are about to register, or have recently registered for VAT and would like more information please call.