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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15940
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I'm registered Flat Rate Scheme, where I pay a 13.5%

Resolved Question:

I'm registered for the Flat Rate Scheme, where I pay a 13.5% flat rate on turnover. But my supplier is charging me VAT, and I must charge the customer VAT. So if I buy a product from my supplier for £100 excluding VAT, they charge me £120, but I cannot claim this back, and yet I must charge my customer 20% VAT also, so the cost to them now becomes £144 before I can even break even.
How an earth can I ever be competitive with this? Surely there's something wrong here.
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. If most of your purchases are subject to VAT, then it may be that the flat rate scheme is not going to be beneficial to you. You simple have to do the maths using a full year's figures. Use the methodology here to assess the viability of the flat rate scheme to you. There is also a good calculator here. I hope this helps but let me know if you have any further questions.
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Customer: replied 1 year ago.
Thank you Tony, I will look to cancel this flat rate scheme. Many thanks.