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03 May 2016
Difficulties of choosing the correct VAT flat rate and risks of an HMRC challenge.
Flat rate VAT categories are often discussed but how does one choose the correct rate as listed in HMRC’s Flat Rate Scheme Manual at FRS7200 and FRS7300? I wonder how many of the authors of articles on this subject have actually registered a client for VAT online and used the online percentage that is automatically populated depending on the trade selected.
Online registration examples include:
- Builders. It seems impossible to get away from 9.5% regardless of whether materials are provided.
- Labour-only lorry drivers. The rate suggested is 10% under transportation.
- Labour-only mechanics. This falls under vehicle repairer at 8.5%.
- Commission sales agents – or just about any kind of salesman. This client was clearly marked in the online application as ‘non-store commission agent’ and it was impossible use anything other than the 7.5% rate.
My point...
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