Value Added Tax can be a very complex area to manage. Making the wrong decision can result in costly penalties, or you could miss out on claims which you are entitled to.

Our in-depth knowledge and experience in this area can provide you with peace of mind, whether we handle all your VAT compliance work to keep your desk clear or just advise on one-off transactions.

Our compliance services include:

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  • Helping you work out whether you need to register for VAT
  • Registering for VAT
  • Completion of VAT Returns
  • EC Sales Lists and EU VAT refunds
  • Helping you decide which HMRC VAT scheme would be best for your business including:
    • Flat rate VAT scheme
    • Annual accounting VAT scheme 
    • Cash accounting VAT scheme 
    • VAT retail schemes 
  • Voluntary Registration
  • Review of transactions where complex tax might apply
  • Review of partial exemption agreements and calculations
  • De-registering for VAT

VAT Flat Rate Scheme Changes 2017 – Limited Cost Traders

On 23rd November 2016, as part of the Autumn Statement, HMRC announced that they would be bringing in changes to the VAT flat rate scheme from April 2017.

The flat rate scheme was brought in as a simplified way of dealing with VAT, however many businesses were able to make additional profit by being on the VAT flat rate scheme which HMRC are now closing out.

From April 2017 HMRC have introduced a new category of trader, a ‘limited cost trader’, with a VAT flat rate scheme percentage of 16.5%

Currently under the flat rate scheme a business chooses the appropriate flat rate percentage according to its sector, however under the new rules from April 2017 you will have to consider whether you will meet the conditions for a ‘limited cost trader’ and if you do you will have to use the 16.5% flat rate percentage.

What is a limited cost trader?
A business is a limited cost trader if its VAT inclusive expenditure on relevant goods is either:

  • less than 2% of the VAT flat rate turnover
  • greater than 2% of the VAT flat rate turnover but less than £1000 per year

If your VAT return period is less than one year the figure is the relevant proportion of £1000, for example for a quarterly VAT return this would be £250.

One thing to be really careful of is that you have to check each VAT return to see if you are categorised as a limited cost trader or not – you could be a limited cost trader for one VAT period, and then back to your usual flat rate category for another.

HMRC have an online tool that you can use to check your status for each VAT return

If you think you might be a limited cost trader then read our more detailed guidance HERE

VAT Advisory services

We can also offer more in-depth support for the following scenarios:

  • Help preparing for an HMRC VAT assurance visit, including a pre-inspection “health check” and attendance on site during any visit
  • Assessment of Land and property transactions to minimise the VAT
  • Advice on structuring business acquisitions and sales, including group re-organisations to minimise the VAT
  • Reviewing the international implications of any transactions