Given the flat rate scheme is essentially an administrative simplification, it would seem logical to expect to have to account for VAT on assets and stock held at deregistration as normal. This is on the basis that input VAT has been "reclaimed" on these items by the percentage applied to turnover being less than the full amount of output VAT charged to customers.
However, HMRC guidance appears to say that you only have to account for VAT on items held before entering the flat rate scheme (i.e. items where VAT was claimed as normal under ledger or cash accounting) Can anyone confirm the position either way, preferably with reference to legislation if available?
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Are you sure you're reading that correctly...
.. what it effectively says is that there are two stages:
You leave FRS on the day before you deregister (see below)Then you deregister and under para 12.4 account for Output VAT on:That final day's sales, andThe value of any capital expenditure, andThe value of any stock on hand on which you claimed VAT when you registered.
For leaving FRS you then need to look down to 12.8 to 12.9 to see what to do about the stock that accrued between registration and leaving FRS that you still have on hand.
Between those two adjustments you should find that you have accounted for everything.