½Û×ÓÊÓƵ

Overview of the flat-rate scheme for small businesses

UK flat rate scheme

The flat rate scheme (referred to here as 'the scheme') was introduced from 24 April 2002¹. The main benefits of the scheme are intended to be²

1. Ìý

   •ÌýÌýÌýÌý simplified record keeping, as the taxpayer does not have to keep detailed records of sales and invoices

2. Ìý

   •ÌýÌýÌýÌý fixed-rate percentages that are lower than the standard rate

3. Ìý

   •ÌýÌýÌýÌý simpler cash flow management

Broadly, it allows HMRC, by regulations³, to make provision for authorised businesses to calculate their VAT liability by applying a fixed percentage to their turnover for the relevant period, rather than totalling the amounts of output tax charged on individual supplies, and the input tax paid on individual purchases, in that period⁴. However, such a business is not relieved of the obligation to issue tax invoices for sales to other taxable persons.

A person who is, for the time being, authorised under the