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Frequency of revenue tests for VAT FRS

How often does revenue need to be tested under Regulation 55M(1)(b) of the Flat Rate Scheme?

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How often does revenue need to be tested under Regulation 55M(1)(b) of the Flat Rate Scheme?

Regulation 55M(1)(a) and (b) of Value Added Tax Regulations 1995 (Part VIIA Flat Rate Scheme for Small Businesses) (as amended) state that:

55M.—(1) Subject to paragraph (2) below, a flat-rate trader ceases to be eligible to be authorised to account for VAT in accordance with the scheme where—
(a) at any anniversary of his start date, the total value of his income in the period of one year then ending is more than £230,000,
(b) there are reasonable grounds to believe that the total value of his income in the period of 30 days then beginning will exceed £230,000,

It seems clear that Regulation 55M(1)(a) requires the revenue test to be applied once each year on the anniversary of a business’ start date. However, Regulation 55M(1)(b) refers to a period of 30 days “then beginning”. 

Should this be interpreted to apply to a period of 30 days then beginning on the anniversary of start date, so the test is applied once per year, or is it required to apply this test every day, month, or quarter? If the latter, what is the correct frequency?
 

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By Julie.T
18th Jun 2021 15:59

https://www.gov.uk/vat-flat-rate-scheme/eligibility Check this out, bit clearer, next 30 days alone, so if you expect to exceed £230,000 in the next 30 days from today, you have to leave. Makes sense, why would such a monster leap in turnover apply just to the anniversary date, and 30 days thereafter of you joining the scheme? Hope that helps!

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By Duggimon
18th Jun 2021 16:10

It's two different tests, hence the two different lengths.

If your turnover actually goes above £230K in a year, tested once a year on the anniversary, then you have to leave.

If at any point you realise the turnover in the next thirty days will go above £230K, you need to leave the scheme.

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By Paul Crowley
18th Jun 2021 17:01

Agree both
30 days is not a monthly test
If turnover goes up by at least 12 times the annual limit, you knew the date you got the contact.

FRS has time expired and should just be junked now that MTD exists
The justification was for people who could not cope with record keeping
In practice only ever used to make a profit on VAT

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