Flat rate VAT queries

SirLes · March 2015

Have acquired a new client, trading 18 months. They do SEO work & are on Flat rate VAT.
Three queries:
1. They claim that they are in "advertising", & therefore applicable Flat rate is 11%. I'm unsure (& wonder whether "IT consultancy" at 14.5% is closer ?) Anyone dealt with similar ?
2. I know that is for the taxpayer to 'decide' the applicable rate, but what happens if HMRC knock on the door and disagree?
3. The client has failed to claim their 1% Year One 'discount' -- can this be done retrospectively, or is it gone for ever ?

Thanks in advance.

Scalloway · March 2015

As with all VAT errors I am sure you can just deduct the overpayment on the next return. Let HMRC know if the amount is substantial.

burg · March 2015

Never had a flat rate queried. I can see some logic behind the 'advertising' selection. This gives more of an idea of each category - http://www.hmrc.gov.uk/manuals/frsmanual/FRS7300.htm

If they can argue why and it makes sense then just advise them of the HMRC guidance - see section 4.2 - https://www.gov.uk/government/publications/vat-notice-733-flat-rate-scheme-for-small-businesses/vat-notice-733-flat-rate-scheme-for-small-businesses#determining-your-flat-rate-percentage

You can apply the 1% deduction now on the next return (subject to usual adjustment rules). It may cause HMRC to ask questions though.

Flat rate VAT queries

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