Flat Rate Scheme

We were expecting one or two changes in the PBR to flat rate scheme VAT rates (in terms of reverting to new rates rather than the pre 1 Dec 2008 rates) - what we actually have though is a majority of rates chnaging, both up and down.

This means its essential for all flat rate businesses to check out the new rate, and not just assume it'll revert to the old level. New rates are here: (my apologies for the rubbish formatting!)

Flat Rate Scheme percentage rates from 1 January 2010

Accountancy or book-keeping
13
Advertising
10
Agricultural services
10
Any other activity not listed elsewhere
10.5
Architect, civil and structural engineer or surveyor
13
Boarding or care of animals
10.5
Business services that are not listed elsewhere
10.5
Catering services including restaurants and takeaways
11
Computer and IT consultancy or data processing
13
Computer repair services
9.5
Dealing in waste or scrap
9.5
Entertainment or journalism
11
Estate agency or property management services
10.5
Farming or agriculture that is not listed elsewhere
6
Film, radio, television or video production
11.5
Financial services
12
Forestry or fishing
9.5
General building or construction services*
8.5
Hairdressing or other beauty treatment services
11.5
Hiring or renting goods
8.5
Hotel or accommodation
9.5
Investigation or security
10.5
Labour-only building or construction services*
13
Laundry or dry-cleaning services
10.5
Lawyer or legal services
13
Library, archive, museum or other cultural activity
8.5
Management consultancy
12.5
Manufacturing fabricated metal products
9.5
Manufacturing food
8
Manufacturing that is not listed elsewhere
8.5
Manufacturing yarn, textiles or clothing
8
Membership organisation
7
Mining or quarrying
9
Packaging
8
Photography
10
Post offices
4.5
Printing
7.5
Publishing
10
Pubs
6
Real estate activity not listed elsewhere
12.5
Repairing personal or household goods
9
Repairing vehicles
7.5
Retailing food, confectionary, tobacco, newspapers or children’s clothing
3.5
Retailing pharmaceuticals, medical goods, cosmetics or toiletries
7
Retailing that is not listed elsewhere
6.5
Retailing vehicles or fuel
6
Secretarial services
11.5
Social work
10
Sport or recreation
7.5
Transport or storage, including couriers, freight, removals and taxis
9
Travel agency
9.5
Veterinary medicine
10
Wholesaling agricultural products
7
Wholesaling food
6.5
Wholesaling that is not listed elsewhere
7.5

What if I can't pay my Tax bill?

One thing we've noticed in the office is the continuing successful usage of the 'Business Payment Support Service' by clients. This service was introduced late last year to assist businesses with tax payments by permitting payments to be spread over a period of time.

The service has been criticised however by those who say the extended payment terms put off the inevitable [business failure], and have been too easily obtainable, without suitable checks being made.

In fact, just this last week, we made a call on behalf of a client with a £2k VAT bill they could not settle - we stated the terms the client could settle over (4 months) and the arrangement was agreed, no further questions. In this instance, a perfectly viable business just having a short term cash flow problem.

Whatever your opinion on the scheme, for many out there its been the lifeline they've needed during the recession.

Its worth noting however, just because HMRC have 'gone a bit soft' on paying them on time, the deadline to get returns in (be that VAT, PAYE, CT, or self-assessment) remain fixed, and missing those deadlines will incur financial penalty.

Following all that I guess the message is if paying will be a problem, get the return completed and filed on time and speak with HMRC before the payment is due to agree a payment schedule that will work for both of you.

AS