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Most interesting, however, without being pedantic, my understanding is if as per example 1 the T/O of £240K exceeds the FRS of £230K will not this builder be forced to join the Standard VAT reporting Scheme
@ Andrew1946.
To respond to your question, and as Neil's guidance states:-
" . . . . a business does not need to leave (the scheme) until annual sales exceed £230,000 including VAT on the anniversary of when it joined the scheme".
[As a small point, I have noticed in the past that the words "the anniversary" are likewise included in HMRC's guidance: in my submission, and as I pointed out to HMRC some years ago, the words "the anniversary" should really be "each anniversary", since one has to consider on each and every anniversary date, whether one still qualifies to use the FRS scheme].
Neil has, re his example, stated that the "annual sales (all standard-rated) ARE [my emphasis] £200,000 plus VAT". Given that it is implied, in Neil's example, that "John" is VALIDLY operating the FRS, then it is likewise implied that, at the LAST anniversary date, the previous year's sales had NOT exceeded the £230,000 threshold (ie that the increase in annual sales to £240,000 had only arisen AFTER that last anniversary date).
Such being the case, then "John" is ONLY required to consider whether he is entitled to remain in FRS on the NEXT anniversary date [even if, hypothetically, the annual sales had increased, in the meantime, to (say) £600,000].
On a general level, the central thrust of Neil's article is valid, and ALL builders operating FRS, and agents acting on their behalf, should NOW consider whether to notify HMRC of leaving the FRS with effect from 1 October 2019 (whether such notification is advantageous can only be determined by considering to what extent the reverse charge rules will affect the amounts payable to HMRC on their VAT Returns).
Basil.
@ Andrew1946.
" . . . . a business does not need to leave (the scheme) until annual sales exceed £230,000 including VAT on the anniversary of when it joined the scheme".
I, for one, hadn't realised it was an annual check, so thanks for that Basil.
Where a supplier has a mix of CIS (reverse charge) sales and end-user sales, am I right to conclude that the FRS will continue to (and only) apply to the end-user sales because "reverse charge supplies are excluded from the supplier’s return"?
Also will the CIS (reverse charge) sales still count towards turnover for the FRS annual limit review?
Basil, I can only speak from our own personal experience whereby my company breached the £230k threshold during one particular quarterly VAT period, based upon a 12 month rolling average. HMRC wrote saying as from a certain date in the following quarter (mid month) that we would cease to be in the FRS. Fortunately having argued that the previous quarter was exceptionally high due to a non continuing contract,, and by the Year End the level of Turnover would be likely to be below the £230k threshold, HMRC accepted this reasoning and reversed their decision