vat | Quids and Quills

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%.

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European publishers and booksellers have welcomed the decision of the European Commission (EC) to allow VAT to be reduced on e-books, with sales now bound to go up, according to booksellers.

Brussels yesterday (1st December) released proposals for new tax rules, including delivering on its pledge “to enable Member States to apply the same VAT rate to e-publications such as e-books and online newspapers as for their printed equivalents, removing provisions that excluded e-publications from the favourable tax treatment allowed for traditional printed publications”.

The EC first committed to reducing VAT rates on e-books earlier this year. In an Action Plan published in April, part of its digital single market strategy, it said it sought to address “the unequal treatment of paper versus e-publications for VAT purposes”. At the time, Stephen Lotinga told The Bookseller he welcomed the prospect of “greater flexibility”, saying “the tax system should not act as a disincentive to reading and learning”.

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