Well, it’s been a year since my limited company has been up and running and I’ve been chugging along quite happily thanks to FreeAgent and all its awesomeness. I finally found a good bookkeeper to go over my books and check everything but unfortunately had a bit of a nasty surprise.
It turns out that if you have sent bills to customers in the EU then even though they are zero-rated (if the other company has a valid VAT ID) or they are from customers in the U.S etc, the HM Revenue and Customs still expects you to pay your flat rate of VAT from those too. If I had been on regular VAT then I wouldn’t pay VAT on those.
I really should have studied the scheme more so I’m taking this as an expensive lesson and thought I’d share this information on here too in case someone else is in a similar situation and they still have time to do something about it. I am now sending a letter to cancel my flat rate VAT and going to the regular kind. We’ll see what happens once Brexit hits!
You have to cancel it by writing to:
HM Revenue and Customs
77 Victoria Street
If you’re unsure on what to write, I simply wrote a short note (below) and put my name, title and signature. I also printed it on letterheaded paper. I’ll see if that goes through.
“I am writing to request a cancellation of the flat rate scheme for Crafty Coding Ltd. registered in Scotland (#IDHERE#). I would like the company to continue on the standard-rated VAT in the future. Please don’t hesitate to contact me via email or phone if you require any further documentation or information.”
They really should have this digitised by now!