Yes. For all our clients where we either produce or review VAT returns quarterly we have already made recommendations. One clear trend is that all of the service businesses we deal with are better off changing from the flat-rate scheme to the normal scheme. Because it is only goods (excluding fixed assets) not services or intangibles, such businesses typically spend very little on costs that would be allowed in the calculations.

Taking our business as an example (although we aren’t on the flat rate scheme anyway) because the bulk of our costs are payroll (including sub-contracted staff), travel, software, subscriptions, hosted IT services, office rental and telephony, the remaining costs we could take into account are below the 2% level (largely printer cartridges, printing and stationery!) even though costs on which we pay VAT are a long way above that level. The new rules seem to be particularly harsh for service businesses.

What we haven’t done and should have, is to talk to those clients of ours on the flat rate scheme where we don’t get involved in the quarterly returns. Time to hit the phones…….