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Welcome to Acconomy
Finding the right Accountant can be hard work. You want to be able
to talk to someone who knows your industry inside out, someone who
is qualified and has a wealth of experience in dealing with
contractors and freelancers.
Look no further, Acconomy is a PCG Accredited, specialist and highly
experienced firm of Chartered Certified Accountants; we know what's
best for your contracting business. |
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Flat Rate
VAT Scheme For Contractors – An Overview
In essence, instead of paying Customs the total VAT charged on
invoices minus any input VAT you may reclaim, you charge a fixed
percentage of your gross turnover and pay that amount to Customs
each year.
The fixed rate VAT percentage varies according to the type of
business you run;
For example: -
· IT consultancy 13.5%, 14.5% from year 2
· Management consultants 13%, 14% from year 2
· Journalists 11.5%. 12.5% from year 2
· Legal services 13.5%, 14.5% from year 2
But do note that this percentage is applied to the VAT inclusive
sales value.
Notes related to the Flat VAT Scheme
Businesses in their first year of VAT registration can benefit from
a 1 per cent reduction in the flat rate.
You can apply i f your annual taxable turnover (not including VAT)
will be £150,000 or less; and your annual total turnover (including
VAT) will be £187,500 or less If you buy a single capital asset with
an invoice value, including VAT, of £2,000 or more you can claim the
input tax on your VAT return in the normal way You continue to
invoice clients at the normal 20% rate.
You can voluntarily leave the flat rate scheme at any time Once you
join the scheme you can stay in it until your total business income
is more than £230,000. Whether or not your business would be better
off under the flat rate scheme depends very much on the extent to
which you have standard rated VAT purchases within your business. It
is though common for consultancy businesses to make a ‘profit’ by
operating the flat rate scheme.
If you need any assistance just call or email and I’ll be happy to
point you in the right direction
Or send us a
query Click Here to Email Us
Make a ‘profit’ by operating the flat
rate scheme.
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