Commentary

733 Flat rate scheme for small businesses

Part V8 HMRC Notices
Part V8 HMRC Notices | Commentary

733 Flat rate scheme for small businesses

Part V8 HMRC Notices | Commentary

733
Flat rate scheme for small businesses

December 2020

This notice cancels and replaces Notice 733 (April 2017).

Parts of this notice have the force of law under VAT Regulations 1995, regulations 55A-55V, 57A and 69A. These parts are indicated by being placed in a box as in this example.

Example:

The following rule has the force of law

If you receive a net payment, you must include the full value before such deductions (and including VAT) in your scheme turnover. This will usually be the value shown on your sales invoice.

For current information regarding the trade sectors and flat rate percentages see VAT Flat Rate Scheme – Flat rates for types of business.

1 Introduction

1.1 What this notice is about

This notice describes the flat rate scheme, who can use it and how to apply to join.

Many of the normal VAT rules apply to the flat rate scheme. So if you cannot find the answer to your question in this notice, remember the basics of VAT can be found in Notice 700 “The VAT Guide”.

Main narrative treatment—V2.199B–V2.199D.

1.2 Changes to this notice

Step 5 of paragraph 4.1 has been amended to clarify the process for choosing your flat rate sector.

2 Basics of the flat rate scheme

2.1 The flat rate scheme

The flat rate scheme is designed to help small businesses by taking some of the work out of recording VAT sales and purchases. It allows you to apply a fixed flat-rate percentage to your gross turnover to arrive at the VAT due.

Fixed-rate percentages vary depending on the type of business.

Main

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