Leaving the flat rate scheme

November 23rd, 2014

The good news for small businesses using the flat rate scheme is that the exit thresholds are almost 30% higher than the joining levels in relation to turnover.

A business needs to check on the anniversary of joining the scheme that gross turnover for the previous 12 months has not exceeded £230,000. If it has exceeded this figure it must inform HMRC that it is leaving the scheme, unless it can convince HMRC that gross turnover in the next 12 months after the limit has been exceeded will be less that £191,500, i.e. the prior years high turnover was a “one-off”.

For a business making standard rated sales, £230,000 gross of VAT equates to £191,667 net of VAT, which is much more favourable than the joining limit of £150,000 net of VAT.

Based on article written by Neil Warren, published Jan 14.

www.theaccountingfactory.co.uk

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