Continuing with our previous example (http://www.taxpartnersuk.com/news_detail.php?news_id=66) we would now consider situations where the following services should choose FRS over the standard rate:
| Services | VAT Flat Rate |
|---|---|
| Any other activity not listed elsewhere | 12.00 |
| Boarding or care of animals | 12.00 |
| Business services that are not listed elsewhere | 12.00 |
| Estate agency or property management services | 12.00 |
| Investigation or security | 12.00 |
| Laundry or dry-cleaning services | 12.00 |
| Input cost % | Flat rate scheme | Standard VAT Scheme | Savings | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Input VAT % | FRS VAT % | Received % | Paid % | Net % | Revenue | Input cost | Net | ||
| 10.00 | 2.00 | 14.40 | 120.00 | 26.40 | 93.60 | 100.00 | 10.00 | 90.00 | 3.60 |
| 13.00 | 2.60 | 14.40 | 120.00 | 30.00 | 90.00 | 100.00 | 13.00 | 87.00 | 3.00 |
| 15.00 | 3.00 | 14.40 | 120.00 | 32.40 | 87.60 | 100.00 | 15.00 | 85.00 | 2.60 |
| 20.00 | 4.00 | 14.40 | 120.00 | 38.40 | 81.60 | 100.00 | 20.00 | 80.00 | 1.60 |
| 25.00 | 5.00 | 14.40 | 120.00 | 44.40 | 75.60 | 100.00 | 25.00 | 75.00 | 0.60 |
| 28.00 | 5.60 | 14.40 | 120.00 | 48.00 | 72.00 | 100.00 | 28.00 | 72.00 | 0.00 |
| 30.00 | 6.00 | 14.40 | 120.00 | 50.40 | 69.60 | 100.00 | 30.00 | 70.00 | (0.40) |
| 35.00 | 7.00 | 14.40 | 120.00 | 56.40 | 63.60 | 100.00 | 35.00 | 65.00 | (1.40) |
| 40.00 | 8.00 | 14.40 | 120.00 | 62.40 | 57.60 | 100.00 | 40.00 | 60.00 | (2.40) |
| 45.00 | 9.00 | 14.40 | 120.00 | 68.40 | 51.60 | 100.00 | 45.00 | 55.00 | (3.40) |
| 50.00 | 10.00 | 14.40 | 120.00 | 74.40 | 45.60 | 100.00 | 50.00 | 50.00 | (4.40) |
For these services, as can be seen above, choosing the FRS can make financial sense only so long as their VAT-able input costs do not exceed 28% of the turnover excluding VAT.
