All 25 VAT Records questions
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Bookkeeping › VAT Records

What is the VAT flat rate scheme?

Intermediate

Answer

The flat rate scheme lets eligible small businesses pay VAT as a fixed percentage of their VAT-inclusive turnover, keeping the difference between the VAT charged to customers and the flat rate paid, but generally not reclaiming input VAT (except on certain capital assets). It simplifies record-keeping at the cost of losing input VAT recovery.
Turnover incl. VAT 12,000, flat rate 12% -> pay 1,440 regardless of input VAT.
Real-world example A consultancy uses the flat rate scheme to simplify VAT, paying a set percentage of gross turnover.

Common follow-ups: Can you reclaim input VAT on the flat rate scheme? | Who is eligible?

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All 25 VAT Records questions