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Is it possible not to use the VAT flat rate scheme if this is disadvantageous?
Despite encouragement a builder client does not keep proper records. When preparing the accounts I realised that the VAT threshold had been exceeded in April 2014. I registered the business for VAT from 1 June 2014 but because there were no purchase receipts I applied to use the flat rate scheme (FRS) at 9.5%. I have just received the client’s VAT number so I am ready to file the returns online and bring them up to date. I calculate that about £15 000 is owed and possibly penalties in excess of £2 000.
The problem is that the client carried out building work on a new house in the late registration period earning about £80 000. If they were on the normal VAT scheme this would mean that there was no output VAT to pay and input tax could be claimed on the...
