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Flat rate scheme VAT reporting

From June the requirements for Flat rate scheme VAT reporting are due to change.

Businesses registered under the flat rate VAT scheme should no longer include imports accounted for under postponed VAT accounting in their flat rate turnover. Businesses will still need to complete a flat rate scheme calculation and record the VAT due on imports. The import VAT value should be included in box 1. of the VAT return.

The correct treatment under the legislation excludes the value of imported goods from the flat rate scheme calculation.

The scheme is for businesses with a turnover below £150,000 per year (excluding VAT). New rules have been introduced to stop the scheme being abused.

If a businesses turnover exceeds £230,000 in the year, they will no longer be eligible to use the scheme unless HMRC is satisfied that the income value in the next 12 months will not exceed £191,000. If this is the case businesses may still be able to use the scheme.

Companies who are part of a VAT group or are eligible to join a VAT group cannot use this scheme.

Introduced in January 2021, postponed accounting allows UK VAT registered businesses to declare and recover import VAT on the same return. Instead of paying it upfront and recovering it later.

If you need advice on VAT registration contact AJR & Co Ltd.