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 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.

Avatar for Jon Pryse-Jones
About Jon Pryse-Jones

Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.

An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”

Jon’s appreciation for THP extends to his fellow team members and the board.  “They really know how to run a successful business,” he says.  He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.

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