I have had a cold this week, my head feels like mush and it’s hard to think, so not much work has been done apart from setting up my new computer (which was a mistake, the keyboard on my current computer stopped working as if in protest). Fortunately, after ringing Steve (my tame computer guru) I found a USB keyboard instead of faffing around with the old one. A simple solution, as they are often (afterwards).
Talking of simple, does anyone use the flat rate VAT scheme? It was designed to make life simpler for VAT registered businesses by allowing them to take a percentage of their turnover (depending on their business type) and pay that rather than calculating the VAT on every transaction as you would normally do.
So far so good but one little trick which had been popular, was for businesses who had little purchased VAT to use this to actually make a profit (I won’t go into details here).
Sadly HMRC have decided to put a stop to this from 1 April this year. If you don’t spend enough on goods for resale or that get used up in the business (stationery for instance); and it has to be goods, services don’t count; then you will have to use a new 16.5% rate which effectively ends this little sideline.
Fair enough of course, as it wasn’t designed to make anyone a profit but of course it does make things a whole lot more complicated for any of you on the flat rate because it made life simpler. Because now it doesn’t. Every time you do a return you may have to work out what rate to use (and the calculation isn’t that easy) which kind of defeats the original purpose of the scheme for a lot of service businesses with few purchases.
Anyway I am going to get back to a hot chocolate and a comfy sofa (one of the perks of being able to work from home if I want), have a great week everyone and I hope normal service will be resumed as soon as possible.
Paul