VAT is changing, if you’re on the Flat Rate Scheme.
Briefly, this is an existing, simplified scheme for smaller VAT-registered businesses (up to £150,000 turnover) who don’t have many transactions – or not many types of transactions – to make it easier for them to maintain VAT-compliant records.
Instead of totting up each quarter what you’ve sold vs what you’ve bought, and calculating the VAT on the balance – bearing in mind you may have some transactions at differing rates of VAT – you can just take a flat percentage of the sales and pay that over.
This flat rate depends on what kind of business you are, and is lower than the standard rate of 20%. In other words, HMRC will receive (say) a flat rate 14% of your gross sales, instead of you calculating VAT on net sales at 20% then deducting VAT on net purchases at ranges of VAT between 0% and 20%.