Tyas & Company
Chartered Accountants, Registered Auditors, Tax, Business Advisors
Friday, 13 December 2019 00:01

VAT Flat Rate Scheme capital expenditure

The VAT Flat Rate scheme (FRS) has been designed to simplify the way a business accounts for VAT and accordingly, reducing the administration costs of complying with the VAT legislation. VAT is calculated under the FRS by applying a flat rate percentage to the flat rate turnover. The flat rate percentage varies from 4% to 16.5%.

There are special rules that apply to expenditure on capital assets worth more than £2,000. These transactions must be dealt with outside the FRS with any input tax claimed using a traditional VAT Return. This is different to other transactions made using the FRS where the input tax has already been included in the calculation of the relevant flat rate percentage.

Businesses can only apply to use the FRS if they expect their annual taxable turnover in the next 12 months to be no more than £150,000, excluding VAT. The annual taxable turnover limit is the total of everything that a business sells during the year. It includes standard, reduced rate or zero rate sales and other supplies. It excludes the actual VAT charged, VAT exempt sales and sales of any capital assets. If a business leaves the scheme, they must wait 12 months before applying to re-join the scheme.

 

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Stephen Tyas                             Stephen Ayres

 

 

Registered to carry on audit work in the UK as GBJ
Limited Liability Partnership by the Institute of
Chartered Accountants in England and Wales

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Telephone: 01293 843900

Fax: 01293 614312

Email: office@tyas.com

5 East Park, Crawley, West Sussex, RH10 6AN

 

 

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