Share this content

Eligible for VAT Flat Rate Scheme?

Retrospective VAT Application

Didn't find your answer?

Would the rolling turnover figures provided demonstrate that I would be eligible for the Flat Rate Scheme?

For a few months I went above £150,000 turnover exc. VAT but it was temporary. Will this affect eligibility?

I'm a small business and am still trading on eBay but have decreased trading frequency until I sort out this VAT registration issue.

When HMRC ask on the VAT registration application form what your expected turnover will be for the next 12 months, where would this figure be derived from? An educated guess or do they need some sort of proof? I'm guessing it will be over £85,000 inc. VAT.

Replies (2)

Please login or register to join the discussion.

By Les Howard
10th Sep 2018 08:59

One condition of admission to the FRS is that you do not expect your taxable turnover to exceed £150,000 in a year. Since you now know that you did exceed that limit, you are ineligible to enter.
You can apply from a later date, as the turnover threshold looks forward not backwards.

Thanks (1)
By fawltybasil2575
10th Sep 2018 13:12

@ OP.

Firstly, and in intending no offence, I think that when you refer to (i) the "VAT registration" and (ii) the "VAT registration form", you mean (respectively) (i) the application to join the FRS and (ii) the application form to join the FRS.

As an aside, I assume that you are currently VAT-registered, and that you have not applied to deregister from VAT (presumably because of the problems encountered, by EBAY traders, with EBAY themselves, over their requiring traders to be VAT-registered in order to continue their trading on EBAY).

In order to apply for the FRS, you simply need to estimate, in good faith, your future annual taxable turnover: if this figure does not breach the £150K threshold, then your application SHOULD be accepted. HMRC will not normally request evidence, at the outset, to support your application (and are unlikely to do so in your case in view of your recent turnover).

However you should, immediately before you submit your application, prepare a record of your reasons/calculations for your belief, and retain that record in case HMRC seek later to challenge the integrity of your application: this would be essential if, for example, it later transpired that (due to an unforeseen increase in trade) your turnover exceeded the threshold (if, incidentally, the taxable turnover transpired to be say £250K for the opening 12 months of the FRS, HMRC would be unable to validly claim that you had breached the rules, as long as you had retained the "record" to which I referred above, and were able to substantiate its authenticity).

To reaffirm, there is no requirement to provide "some form of proof" to HMRC, when submitting the FRS application.

As regards the opening date to be shown on the FRS application, it is (in the vast majority of cases) beneficial to show the first day of the current VAT quarter (eg 1 August 2018 if your last Return submitted was for the quarter to 31 July 2018); and this date would almost certainly be accepted by HMRC.

It is advisable to include a note on the application form to the effect that this opening date will simplify the VAT Return for the current quarter, to avoid having to prepare a Return which covers (to take the example of an application submitted online today - again assuming the same VAT periods as referred to above) (a) 1 August 2018 to 9 September 2018 and (b) 10 September 2018 to 31 October 2018.

As Les has said, the FRS is a "looking forward" scheme.


Thanks (1)
Share this content

Related posts