It has been a long time since I have written about the flat rate scheme (FRS). The reasons are simple: the introduction of the ‘limited cost trader’ category in April 2017 and its draconian rate of 16.5% has made the scheme as attractive as a cold pint of beer on a rainy day at the seaside. It has really been a no-go area since then although many businesses still use it and enjoy tax and time saving benefits. The limited cost category applies to a business that does not spend much money buying goods ie many service businesses.
But the scheme recently reared its head in my inbox with an accountant’s query about the relevant flat rate category for boxing and martial arts sessions. It prompted me to ask the important question: is HMRC making the scheme even more unattractive to users by steering certain traders...
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