Readers’ forum: Is hairdresser using the wrong category?

One of my clients trades as a sole trader hairdresser and owns the freehold of her salon. She is VAT registered and uses the flat rate scheme.

Two years ago my client stopped doing hairdressing work and her income from the salon now is only earned by renting out chairs to two self-employed stylists. The stylists pay her 25% of their earnings and keep all of their own sales. However does this activity change mean she no longer qualifies for the hairdresser/beauty services category with the flat rate scheme? Perhaps she should use the rate for ‘real estate’ instead as she is earning income from land or perhaps the ‘any other activity’ category? She buys enough towels and other items to avoid being a ‘limited cost trader’.

Separately if a change of category is appropriate should it be done from the current VAT period –...