Landlord, this is flat!

RICHARD CURTIS has to visit the pub to research a VAT problem.

THE VAT FLAT rate scheme has the advantage of simplifying matters for smaller businesses with an annual taxable turnover (not including VAT) that does not exceed £150 000 and whose total turnover (including the value of exempt and non-taxable income but not including VAT) does not exceed £187 500 a year. Under the scheme VAT is charged on sales at the normal rates but when preparing the VAT return instead of declaring output VAT and deducting input VAT to arrive at the net VAT payable or repayable position the net VAT liability is calculated on sales by reference to a flat rate — the 'appropriate percentage' — that is fixed at levels of between 2% and 13.5% depending upon the type of business being carried on.

Mr and Mrs Morgan ran a...