If your annual turnover excluding VAT will be less than £150,000 you are eligible to join the Flat Rate VAT scheme. The advantage of joining is that you still charge VAT on your sales invoices at 20% but only pay back to HMRC a lower rate depending on your profession. It is also much easier to prepare your vat return whilst on the flat rate scheme and the calculations are much simpler.
The disadvantage is that you do not claim back VAT on your purchases or expenses so if you are buying lots of stock this may not be for you. You can however reclaim back VAT on capital asset purchases over £2,000 for example computer equipment, providing they are all on the same receipt.
If you have an unusual business and are paying significant input vat or are recharging a lot of expenses to your clients then the flat rate scheme could be less advantageous, it is always worth checking with your bookkeeper or accountant how the scheme would work for you.
If you need any help please contact Sue Barnes or Julie Arrowsmith