Is your business eligible for flat rate VAT?

VAT-folder

You can join the flat rate VAT scheme if your business’ VAT taxable turnover (the turnover of all goods and services sold that aren’t tax exempt) is less than £150,000.

When you can’t join the flat rate VAT scheme

You can’t join the flat rate VAT scheme if:

  • You left it in the last 12 months.
  • You committed a VAT offence in the past 12 months.
  • You joined, or were eligible to join, a VAT group in the last 24 months.
  • You registered for VAT as a business division in the past 24 months.
  • You’ve already joined a margin or capital goods VAT scheme.

You can’t join the flat rate VAT scheme if your business is closely associated with another business, too. This means:

  • One business is under the dominant influence of another.
  • The businesses are closely bound by financial, economic and organisational links.
  • The other company has the right to give directions to you.
  • Your company usually complies with the directions of the other company.

When you need to leave the flat rate VAT scheme

Your company must leave the flat rate VAT scheme if:

  • You’re no longer eligible for it.
  • On the anniversary of joining your turnover for the past 12 months was over £230,000.
  • On the anniversary of joining you expect your turnover to exceed £230,000 in the next 12 months.
  • You expect your income to exceed £230,000 in the next 30 days.

How to apply for flat rate VAT

If you’re eligible, you can apply for the flat fate VAT scheme online when you register for VAT. You can also download form VAT600, complete and return to HMRC (the address is on the form).

If like many working mums who start a business you use an accountant, they can help you decide if you are eligible for the flat rate VAT scheme and apply for you.

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