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HMRC has blown the whistle on abuse of the VAT flat rate scheme.
KEY POINTS
- The scheme was designed to benefit traders and HMRC.
- HMRC has lost several cases in which it has tried to compel use of a higher flat rate.
- A new flat rate will apply to limited cost traders.
- It appears that the employment allowance and flat rate scheme have been used to avoid paying tax.
- The 16.5% flat rate will save only £200 on £100 000 of net standard-rated turnover.
- Need for more listed business types and proper enforcement of revenue protection powers.
In the midst of Philip Hammond’s autumn statement there was a brief sentence that made me sit up: ‘We will shut down inappropriate use of the VAT flat rate scheme that was put in place to help small businesses.’ I had to...
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