Leaving FRVS

As many of us know the Government’s announced changes to the Flat Rate VAT Scheme (FRVS) in Autumn 2016 and as it stands I will be better off swapping back to the standard VAT scheme (whatever that is called). However, I the new criteria come into force at the start of next financial year which is for me 2/3rds way through my next VAT accounting period. How do I administer this? Can I stay on FRVS until ten and have a “hybrid VAT period”, do I change from Feb onwards? As the normal/default financial year begins on the 6th April for self employed this will not coincide with the calendar month nature of the VAT periods in any case so there is bound to be a discrepancy. I can’t find any HMRC advise on this matter so any tips would be appreciated.

Hi @llywelyn_owen

Firstly - I’m not an accountant, so I would recommend speaking to one before acting upon anything. We do have a panel who are familiar with QuickFile if you would like me to help you get in touch with any of these?

Secondly - According to VAT Notice 733 (link below):

They would expect that most businesses will leave at the end of an accounting period. However, you may leave voluntarily at any time during an accounting period.

I would expect however, leaving at the end of an accounting period would be a bit easier and save a bit of a headache. In terms of QuickFile, you can only use one scheme during each period. We don’t support changing scheme unfortunately.

Hope that helps!

HMRC Link:

Thank you for your reply Matthew (?), I managed to get through to HMRC helpline at last and they say:
As an example, in my case my current VAT accounting period runs from Feb to end of April. The new FRVS criteria (limited costs trader rules) starts beginning of April. I should write to tell them of my intention to move out of the FRVS, if accepted they write back giving me authority to use FRVS (in my case at 11%) until end of April. That’s it, a shame but quite straight forward in practice.

Thank you for letting us know! I’m sure this will help other users in the same situation.

P.s.: Mathew is correct :wink:

I believe limited costs trader rules apply to labour-intensive businesses where very little is spent on goods. For example, this may affect IT contractors, consultants, hairdressers and accountancy firms. If it is not labour based business and input cost is still very low then new rules should not apply. I still need to do more digging on this, spoke to HMRC on this for one of my clients, they were useless as usual and asked me to write to enquiry team