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Flat Rate Scheme Vat & Hotel California

I'm Not Just A Dunfermline Accountant, I'm An Eagles Fan Too
This Post Was Inspired By Their Famous Hit.

Can You Leave The VAT Flat Rate Scheme?

We Are A Dunfermline Accountant Who Love To Answer Your Questions!

Dunfermline Accountant, OnTax, are working away busily in the office with one of my favourite songs playing, "Hotel California" by The Eagles. Beautiful guitar solo at the end, as an aspiring guitarist I have tried to play it, but it's not so easy! Anyway, one of the lyrics in the song says "You can checkout anytime you want, but you can never leave". Now at the time this line was sung I was undertaking a vat Flat Rate Scheme (FRS) application for a client and decided to look into how easy it was to leave the FRS scheme. Is it the case that you cannot "leave" the FRS just like the Hotel California?

This was a definite research case for us here at OnTax Dunfermline Accountant so we made a few enquiries. What surprised us here at OnTax Dunfermline Accountant was that a recent tribunal case happened in which a taxpayer lost his right to leave the FRS scheme after he discovered that it was better for him not to be under the FRS scheme. At OnTax Dunfermline Accountant and we think this is unfair but the merits of the case have to be considered.

The FRS Scheme Rules

The FRS scheme is one that you cannot join or leave retrospectively. In other words you can only join or leave at the current date, you cannot backdate this and thereby gain some benefit. What OnTax Dunfermline Accountant discovered was that arguing with HMRC about whether it is cheaper for you to be in or out the scheme isn't considered fair reason for a backdated claim.

Their view, they told OnTax Dunfermline Accountant is that the scheme is there to reduce the admin NOT the vat! The downside is that you can end up paying FRS vat on what are normally exempt items i.e if you also own and rent out a house vat on the rent would have to be paid.

Joining The FRS Scheme

OnTax Dunfermline Accountant would like to make you aware that the FRS scheme might simplify your vat but can have horrendous consequences if your business encounters anything out of the norm. To make sure you have covered all bases, ask OnTax Dunfermline Accountant to carry out a full Flat Rate Scheme Appraisal of your business!

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