VAT – Flat Rate Scheme



The recent case of ICAN Finance shows the importance of identifying the entity that is registered for VAT purposes.
In the case of a sole trader, it is the individual and not the business that is VAT registered. 
In terms of the VAT flat rate scheme, the First Tier Tribunal heard that the flat rate should be applied not only to the taxable supplies relating to the trade but also exempt supplies such as rent from a lettings business.
This is a potentially unexpected pitfall which advisers of small businesses should be aware of.