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Turning back the clock

20 August 2013 / Neil Warren
Issue: 4416 / Categories: Comment & Analysis , FRS , VAT

VAT windfalls are not common, but the First-tier Tribunal found in favour of the taxpayer in two recent cases

KEY POINTS

  • Have some accepted flat rate scheme rules been overturned?
  • Don’t forget to record the annual VAT saving.
  • It may be possible to join the flat rate scheme retrospectively.
  • Backdating of a changed flat rate may also be possible.
  • Always check that HMRC have complied with their own guidance.

There are two main rules with the flat rate scheme (FRS) that have been commonly accepted for many years: it is not possible to join the scheme retrospectively if a VAT return has already been submitted for the period in question; and the flat rate category cannot be changed retrospectively if the initial choice was reasonable.

But two recent First-tier Tribunal cases have surprised us all by ruling against these principles – so is there now a window of...

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