VAT FRS new rate

[Lance]

I just rang my accountant to talk about whether to ditch FRS with the new rate of 16.5% that starts in April.
He said that I can stay on the 14.5% rate. This is not what I (and CUK forum last week) understood as I believed that the 16.5% rate for labour-only businesses was likely to include most PSCs.


So before anyone jumps..... check........

[northernladuk]

Did you ask them what their reasoning is behind this?

[Lance]

Did you ask them what their reasoning is behind this?

I did. He's sending me a link to an online calculator. I'll post once I've got it.

[Michael at BI Accountancy]

Could it be that you have VAT inclusive expenditure on goods of greater than 2% of turnover?

[TheCyclingProgrammer]

I just rang my accountant to talk about whether to ditch FRS with the new rate of 16.5% that starts in April.
He said that I can stay on the 14.5% rate. This is not what I (and CUK forum last week) understood as I believed that the 16.5% rate for labour-only businesses was likely to include most PSCs.


So before anyone jumps..... check........

My accountant has advised waiting until final legislation has been published but all signs are (including from updated guidance) that the vast majority of contractors and other businesses who have low goods expenditure will fall under the new rate. What was your accountant's reasoning?

[Lance]

Could it be that you have VAT inclusive expenditure on goods of greater than 2% of turnover?

If I stayed in VAT registered hotels then yes it would have exceeded 2% in total. But I'm a cheapskate and stay in smaller places.
VAT expenditure probably around the 2% mark, but not 100% sure as I've never calculated it before.

[northernladuk]

What was your accountant's reasoning?

He decided to post before he got it so guess we are going to have to wait...

[eek]

My accountant has advised waiting until final legislation has been published but all signs are (including from updated guidance) that the vast majority of contractors and other businesses who have low goods expenditure will fall under the new rate. What was your accountant's reasoning?

+1. Supposedly there will be a new tool in which you entered that quarter's details and it tells you the appropriate rate to claim so I'm not sure how you get around it.

It's irrelevant for me however as my expenses are about to go sky high and I'll need to do VAT properly...

[Lance]

In regards to the new flat rate percentage, I cannot advise on this yet due to HMRC’s decisions not being finalised.

What he put in writing is not the same as he told me on the phone......

[amanwhoisquiet]

This might be a useless question, but does 'labour-only' imply anything about the type of work as opposed to some kind of specialism? If you are a building site labourer, you're shifting bricks and whatever, but with no specific expertise. Any difference to 'thinky' work?