Spring 2009 Newsletter Content Oh for a little hindsight Can't pay, won't pay? Shock in Essex Car tax You signed it Don't be late Age before beauty? IHT and falling prices More paper Shopping around Less paper PAYE or not PAYE... Flat rate scheme A change of heart There are limits Do your duty Free lunch VAT a mess Dissatisfaction guaranteed Don't believe it! Too late Tax on tick £100 note Temp reminder

Flat rate scheme When the VAT rate changed to 15% on 1 December 2008, most of the rates used by traders registered for the small business flat rate scheme also fell - but not by 2.5%. Some of the rates didn't change at all. HMRC explain that the flat rates take account of the amount of input tax that a trader is likely to incur, but a flat rate trader can't recover: when the standard rate goes down, that irrecoverable VAT will fall too. What this means is that the advantage of the flat rate - the difference between the output tax you collect from your customers and the amount you have to pay to HMRC - is likely to go down for the next year. It's unlikely that a flat rate trader will want to leave the scheme just because of this rate change, but it's a reminder that it is worth keeping the scheme under review. If you aren't in it but your turnover is up to £150,000 a year, it's worth considering as it simplifies your VAT and may save you money. If you are in it, you have to monitor your turnover each year in case you have to leave the scheme, and you should also make sure that you are not losing money if you are forgoing a lot of input tax. Then, of course, there are the complications of making sure that you account for the right amount of VAT when someone pays you in December for a flat rate supply you made in November if you want any help with this, we will be happy to advise you.