Can I use the Flat Rate VAT Scheme?

While you may be running two separate businesses in your name, and possibly keeping separate business records, for VAT purposes the income is combined and treated as being from one trading entity.

The Flat Rate Scheme is a simplified VAT scheme that allows you to apply a fixed percentage to your gross turnover to calculate how much VAT you report to HM Revenue and Customs on your VAT return. The percentage is determined by the trading activities of your business.

There are certain criteria to be eligible for the scheme and certain businesses that are not able to join, details of both can be found here.

One of the criteria is that you are not associated with another business. However, this is not relevant where you have two different businesses in your own name as a sole trader.  You can still operate under the Flat Rate Scheme providing you meet the other criteria to join. To determine which percentage is relevant to use when you have two different businesses, you must look at which business is bringing in the most income, and use the percentage for the trade sector relevant to that business. The income levels should be reviewed each year on the anniversary of joining the flat rate scheme and may change if the income mix has changed.

If you would like any advice or assistance in this area please contact us on 0131 665 0771 or use our simple online contact form to arrange a free initial consultation.

Date published 25 Jan 2022

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.