If you need help with any of the above, get in touch with your Cowgills contact or visit our website here. We use our sector experience to deliver tailored financial solutions and support for businesses. There’s no one size fits all where businesses and VAT are concerned.Ĭowgills is a leading independent firm of Chartered Accountants and Business Advisors based in the North West of England – from Greater Manchester to Liverpool. Regardless of whether you are in the FRS or are a business which imports, we recommend that all businesses should review their positions regularly to ensure that any VAT decisions they make provide the best option. We can help you assess whether remaining in the FRS is your best option. The changes from 1 June 2022 are especially important for those who are deemed to be a ‘limited cost business’. If you are a business which does a lot of importing, you might want to consider leaving the FRS because you may not be in a position to recover some VAT you have incurred.

This means you can set the prices based on the scope of work and accommodate the client’s budget for specific projects Charging by the hour can be a headache since you will need to keep detailed accounts Flat Rate: Cons. Businesses are able to record the VAT on their VAT Return rather than paying it immediately upon entry of the goods into the UK.īusinesses who were registered under the FRS were asked to include imports accounted for using postponed VAT accounting in the turnover that is subject to the flat rate percentage.įrom 1 June 2022, businesses registered under the Flat Rate Scheme must not record imports accounted for under postponed VAT accounting within their flat rate turnover – instead, these should be accounted for separately, outside the FRS. Flat rates are easier for the clients to understand as the clients know up front exactly what they have to pay for. It’s a way for UK VAT registered businesses to account for import VAT post Brexit. Postponed VAT accounting was introduced on 1 January 2021. The scheme is for businesses with a turnover of no more than £150,000 a year, excluding VAT. You cannot reclaim the VAT on your purchases – except for certain capital assets over £2,000.You keep the difference between what you charge your customers and pay to HMRC.The amount of VAT a business pays or claims back from HMRC is usually the difference between the VAT charged by the business to customers and the VAT the business pays on their own purchases. Up to, these businesses are able to include import VAT within flat rate turnover and apply a percentage but from 1 June 2022, these businesses must account for import VAT outside of the FRS calculation. HMRC has published guidance on postponed VAT accounting and businesses registered under the Flat Rate Scheme (FRS).įrom 1 June 2022, the way in which businesses using the Flat Rate Scheme must account for postponed import VAT will change and the guidance details how VAT on imports should be accounted for by FRS users.

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