Flat rate scheme override

A married couple owned a company that provided journalism and media services. It registered for VAT in April 2005 estimating its turnover for the next 12 months at £120 000. HMRC approved the use of the flat rate scheme (FRS) the lower threshold for which was £150 000 while the upper was either £225 000 or £230 000 in the period under enquiry.

The Revenue advised the company in May 2010 that it was no longer eligible to use the FRS because the value of supplies in the previous 12 months was above the upper limit at £236 375.

The wife explained to the Revenue in October 2010 that a one-off piece of work had boosted income and she expected turnover to be £191 500 in the following year. The department agreed that the FRS could continue to be used.

The upper limit was again breached in...