Commentary

V2.199D Flat-rate scheme for small businesses—records, returns, payment and termination

Part V2 Registration – deregistration

V2.199D Flat-rate scheme for small businesses—records, returns, payment and termination

V2.199D Flat-rate scheme for small businesses—records, returns, payment and termination

Records to be kept under the flat-rate scheme

The scheme removes the requirement for flat-rate traders to identify the VAT and value separately in respect of purchase and sales records. However, a flat-rate trader must keep a record of his flat rate calculations showing1:

  1.  

    •     the flat-rate turnover for the prescribed accounting period

  2.  

    •     the flat-rate percentage used

  3.  

    •     the tax calculated as due

  4.  

    •     the amount spent on 'relevant goods' – see V2.199C

The scheme does not relieve a flat-rate trader of his obligation to issue VAT invoices, and calculate the VAT thereon, in the normal manner2. For VAT invoices, see V3.511–V3.529.

In common with all businesses, a flat-rate trader is required to maintain a VAT account. However, if the only VAT to be accounted for is that under the scheme, the amount payable is recorded in the 'VAT payable' portion of the VAT account and no further entry is required3. For the VAT account, see V5.211.

Returns under the flat-rate scheme

The information to be shown on VAT returns generally is covered at V5.103. However, in the case of a flat-rate trader, there are modifications to the manner in which the VAT return is completed as follows4:

Box 1VAT due under the flat rate scheme, plus any other output tax such as from sales of capital assets on which input tax has been recovered (see 'Input tax credit under the flat-rate scheme' below).
Box 2To be

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