INTERACTION WITH VAT FLAT RATE SCHEME
Small businesses with turnover below £150,000 may join the VAT flat rate scheme which makes their VAT accounting much simpler as they merely pay HMRC a percentage of their VAT inclusive turnover.
The temporary reduction in the rate of VAT from 20% to 5% reduces the flat rate percentages for affected businesses as set out below:
|Type of Business||15 July 20 to 12 Jan 2021||From 13 January 2021|
|Catering services including restaurants and takeaways||4.5||12.5|
|Hotel or accommodation||0||10.5|
Note that to use the flat rate percentage for pubs the turnover must be predominantly “wet sales”.