The flat-rate VAT scheme was introduced to simplify VAT for smaller businesses.
Rather than the normal method of claiming input VAT on purchases and expenses and deducting this figure from the VAT on sales,
a flat-rate percentage is applied to the 'flat-rate VAT-inclusive turnover'
of the business and the resulting amount is paid to HMR&C. The percentage used depends on your particular business sector,
and for the first year in the scheme the percentage is reduced by 1%.
The scheme can be used by businesses with taxable turnover of up to £150,000 (excluding VAT).
Once you join the scheme you can continue to use it until your total business income exceeds £225,000.
For further details go to
http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm
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