Q&A: Leaving and re-joining the VAT Flat Rate Scheme

Q. My company makes a relatively high number of business sales to EU-based personal customers - usually over the summer. We also use the VAT flat rate scheme, and I've heard that Brexit may cause issues for us. Is that the case and if so, can we leave the scheme for the summer months?

A: Yes. The problem arises because sales to EU customers are now all zero rated, so you aren't collecting input tax. However, you must still apply the flat rate percentage to these sales. If many of your sales are zero rated, it would probably make sense to leave the scheme. This can be done at any time, just make sure HMRC is informed of your chosen leaving date. However, please note that once you leave you cannot re-join for at least 12 months, so you can't leave for a few months then come back to the flat rate scheme after the summer.

About the Author

Martin Johnson

Partner

With expertise in advising family-owned companies on a range of tax, accountancy and business issues, Martin also has an in-depth knowledge of the automotive and property sectors. In addition, he provides advice on inheritance tax planning and financial management to owner-managed businesses.  Martin leads the firm in developing its expertise in the buy-to-let sector, advising both residential and commercial property owners on relevant tax and legislation issues. A further element to Martin’s role is to build Torgersens’ relationships with banks, financial advisors and specialists in commercial and employment law to ensure that the firm’s clients have access to market-leading guidance.  

To get in touch please e-mail martin.johnson@torgersens.com.