For many contractors, the Flat Rate VAT (FRV) Scheme provides a simple and often lucrative alternative to accounting for VAT using standard VAT accounting principles.
Although the reversion of the VAT rate to 17.5% from 1st January 2010 was largely anticipated, many contractor accountants are now advising their clients that not all Flat Rate percentages have been reset to pre-December 2008 levels.
It is believed that some percentages have changed now that HMRC have had the opportunity to review their position, and study more recent statistical data about the level of Input VAT being re-claimed under the standard method of accounting.
The good news for IT contractors is that the percentage rates for Computer & IT and Management Consultancy have reverted to the original FRS percentages. However, contractors working in other sectors should check the revised rates before completing any VAT returns that cover periods from 1st January 2010 onwards.
The detail was announced in PBRN33, but for ease of reference the attached table shows the rates up to 30/11/08, from 01/12/08 to 31/12/09, and from 01/01/10.
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