The FRS Scheme Rules
The FRS scheme is one that you cannot join or leave retrospectively. In other words you can only join or leave at the current date, you cannot backdate this and thereby gain some benefit. What we discovered was that arguing with HMRC about whether it is cheaper for you to be in or out the scheme isn't considered fair reason for a backdated claim.
Their view, they told us is that the scheme is there to reduce the admin NOT the vat! The downside is that you can end up paying FRS vat on what are normally exempt items i.e if you also own and rent out a house vat on the rent would have to be paid.
Joining The FRS Scheme
We would like to make you aware that the FRS scheme might simplify your vat but can have horrendous consequences if your business encounters anything out of the norm. To make sure you have covered all bases, ask us to carry out a full Flat Rate Scheme Appraisal of your business!
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