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flat rate builder

flat rate builder

A client of ours, builder, is on the flat-rate VAT scheme through a limited company. Vast majority of his jobs carry VAT at the standard rate, so not a problem and it works for them.

However, he's recently landed a couple of big new-build jobs, which will be zero-rated. With the flat-rate scheme this could leave him out of pocket.

Is there a way round this built into the flat-rate scheme? I can't seem to find one.

I've half a mind to advise him to do these jobs separately (or indeed all new-build jobs from here on in) as a sole trader or partnership. Failing that, it might be worth coming off the flat-rate scheme for a while.

Any views/pointers would be appreciated. Cheers.


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16th Mar 2009 09:39

FRS not good for zero-rated income
The FRS is not ideal for any business that has an unpredictable level of zero-rated income or, in fact, income that is subject to 5% VAT. Builders tend to be one of the main traders with this problem - and unfortunately, the best outcome is to probably withdraw from the scheme if the figures work against your client. You can then rejoin again in 12 months time if appropriate.

Neil Warren

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