The compulsory VAT registration threshold rises to £85,000 and the deregistration threshold to £83,000, both on 1 April 2017.
Most businesses which provide services won’t find it beneficial to use the VAT flat rate scheme (FRS) from April 2017. HMRC has now stipulated even tighter requirements for FRS users: goods you buy to use in your business may not be ‘relevant goods’ under the revised rules. These exclude:
- vehicle costs, unless your business is in the transport sector and you run a vehicle
- food or drink to be consumed by you or your staff
- capital goods of any value, such as computers, phones and office equipment
- goods for resale, leasing, letting or hiring out unless your main business activity includes such activities
- goods to be given away as promotional items or gifts
Vehicle repairers will be caught as the motor parts they buy won’t pass the test. Traders who travel to customers, such as mobile hairdressers or IT contractors, will also find the FRS no longer suits them.
Please talk to us if you are currently using the FRS so we can discuss the best approach for your business.