Further Aspects of VAT (5)

Question 1

What does the optional flat scheme simplify?

Answer 1

The way in which small traders calculate their VAT liability

Question 2

Where can the flat rate scheme be used?

Answer 2

If VAT-exclsuive taxable turnover for next 12 months is not expected to exeed £150000

Question 3

What is done to calculate VAT liability?

Answer 3

Apply a flat rate percentage to total (vat-inclusive) turnover

Question 4

What does the flat rate percentage usually depend upon?

Answer 4

Trade sector into which the trader falls

Question 5

If the trader makes no, or limited purchases of goods?

Answer 5

A rate of 16.5% applies so there is very little advantage to using the scheme

Question 6

When can a 1% reduction off the flat percentage can be made?

Answer 6

By businesses in their first year of VAT registration

Question 7

Is input tax recovered in flat rate scheme?

Answer 7

Not recovered

Question 8

What does the flat rate scheme mean?

Answer 8

There is no need to calculate and record output and input VAT

Question 9

Why must a VAT invoice still be issued in a flat rate scheme?

Answer 9

VAT at 20% is still treated as being charged where a supply is made to a registered trader

Question 10

When must a trader leave the scheme?

Answer 10

If tital annual VAT-inclusive turnover > £230000