Claiming back VAT and the VAT Flat Rate Scheme

Many small businesses VAT registered in the first instance to take advantage of the flat rate scheme.  Following changes in 2017, many of these advantages no longer remain and many small businesses now need to consider whether it’s better to de-register.

If you are unsure, it’s wise to get in touch with your accountant and ask them to review your situation and accounting records and advise you, so that you will know whether it’s to your advantage to re-register or not as you don’t need to be paying more VAT than you need to.

If it does seem the best way forward to de-register and once that step has been taken and the application has been lodged, it’s best to complete the final VAT Return as soon as possible so that the final VAT amount due can be calculated and budgeted for.

In cases where sales invoices issued before the date of de-registration have not been paid, it is possible to claim VAT bad debt relief.

For a claim to be accepted the following criteria need to be met:-

  1. The debts must be at least six months old
  2. The debts must have been written off in your books of account

VAT to be reclaimed is calculated at the full rate of VAT that would have been applied had the business NOT been using the flat rate scheme.

Bad debt relief claims would normally be included on a VAT return but any claims made after deregistration require completion of form VAT427. This form can be completed online but must be printed, signed and submitted to HMRC by post. Copies of original invoices are generally not required for claims under £20,000 unless specifically requested by HMRC. The online form can be found here.

Need help with your VAT claim?

If you need any assistance or advice on claiming back VAT please don’t hesitate to get in touch.

Need further advice on any of the topics being discussed? Get in touch and see how we can help.

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About Mark Ingle

Owner-manager business specialist, Mark Ingle is key to building relationships with clients at the Chelmsford office. “I like to see clients enterprises grow and succeed.” Mark explains, “The team here has a lot to offer and I can see a lot of new businesses responding to that.”

Having worked for accountancy practices in London and Essex, Mark has worked with a range of companies varying in size. For Mark, THP stands out for its “local firm approach with the resources of a larger practice.”

Although a keen traveller, Mark is focused on giving his clients at THP the highest service, “Right now, I aim to help the clients we have to the best of my ability which will help me attract more of the right clients in the future.”

Mark’s specialist skills:

  • Annual and Management Accounts
  • Tax and VAT
  • Strategy and Business Planning
  • Marketing and Sales
  • Business Development
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