Buried in the Autumn Statement was an announcement regarding the Flat Rate VAT scheme that many small businesses use to account for VAT. The reason for the changes are because the government believes some businesses are using the scheme to pay less VAT than they should do.
The government have decided that any business using the Flat Rate VAT scheme that has purchases of goods less than £1,000 or 2% of turnover will be now classed as a limited cost trader. A limited cost trader will be able to use the Flat Rate scheme but will pay an enhanced Flat Rate percentage of 16.5%. The new rate will come in to effect on 1st April 2017 and will apply to businesses that sell their time (or staff time) rather than make products/goods. Some examples of businesses affected would be accountants, solicitors, consultants, tradesmen that supply labour and ask customers to provide the goods.
If you would like to check if the above will apply to you and your business then contact Adam on 0161 427 3830 or email at email@example.com.