By using a flat rate vat scheme
- The business will pay a fixed rate of value added tax to HMRC
- The business can keep the difference between the VAT charged to the customers and the amount paid to HMRC
Post Brexit, we can expect certain changes. Essentially, VAT is a European tax and is levied throughout the European Union and is a key feature of the European single market. After leaving the EU in a political sense, the UK might still remain as a member of the single market with commitment to continue complying with EU VAT law.
VAT meets modern day fiscal requirements and in recent years most developed countries have shifted their fiscal balance, depending less on direct income taxes and more dependency on indirect consumption taxes such as VAT, and this trend is expected to continue. This was in March 2016 when the UK’s Office for Budget Responsibility confirmed that after income tax and national insurance contributions (NICs), VAT remains government’s third largest revenue raiser. In 2016/17 VAT was anticipated to produce £120bn – or 18% of total revenue of the government.