How long does a Flat Rate Scheme Application take to go through?

[Karimbo]

Hi

I have applied to join the flat rate scheme. The application form was sent off Tuesday first class.

My VAT return is due next Friday so I really want to get the FRS scheme approval to come through soon so I can submit the current return under FRS.

My question is how long does it typically take to get the approval.

I'm guessing that it will take a while to receive letter through the post confirming acceptance. In which case will it be quicker to check on the HMRC portal. what do I need to look out for on the HMRC website? Will it be obvious and state I'm on the flat rate scheme or will it say so in a not so obvious manner?

 

[MartinCivil]

So are you already on the standard scheme?

We did this, but the other way round. It took just under four weeks for HMRC's confirmation to reach us. I think you will need to wait because this letter will confirm from what date your scheme has changed.

 

[Karimbo]

yes, currently on standard scheme. I'll make a small saving by being on flat rate scheme. But the most important of all is I can work out my VAT owed to the penny without having to do a full bookkeeping. I just have the one bank account for everything and it's a bit of a guesswork working out how much of the bank balance is mine and how much is the VAT mans.

 

[Elijah Rose]

yes, currently on standard scheme. I'll make a small saving by being on flat rate scheme. But the most important of all is I can work out my VAT owed to the penny without having to do a full bookkeeping. I just have the one bank account for everything and it's a bit of a guesswork working out how much of the bank balance is mine and how much is mine

yes, currently on standard scheme. I'll make a small saving by being on flat rate scheme. But the most important of all is I can work out my VAT owed to the penny without having to do a full bookkeeping. I just have the one bank account for everything and it's a bit of a guesswork working out how much of the bank balance is mine and how much is the VAT mans.

shouldn't be hard to calculate its just your profit/income divided by what your FRS percentage is

 

[Elijah Rose]

shouldn't be hard to calculate its just your profit/income divided by what your FRS percentage is

 

[Ziggy2024]

I would be surprised if you get confirmation before your VAT return is due. In fact I'd bet money on it!

You will get a letter with the date on, you will have to submit this quarter on the standard scheme and then amend the next return if appropriate.

 

[Elijah Rose]

I would be surprised if you get confirmation before your VAT return is due. In fact I'd bet money on it!

You will get a letter with the date on, you will have to submit this quarter on the standard scheme and then amend the next return if appropriate.

it really depends how long hes been on the standard vat and the time in which he requested for the frs if he was on the standard scheme by default then requested a month later he should be fine to pay frs vat but thats just an example it depends how long before one request but in the time he sent the message he probably does have to pay the vat for the quarter he was on standard scheme

 

[Ziggy2024]

it really depends how long hes been on the standard vat and the time in which he requested for the frs

No it doesn't.

if he was on the standard scheme by default then requested a month later he should be fine to pay frs vat but thats just an example it depends how long before one request but in the time he sent the message he probably does have to pay the vat for the quarter he was on standard scheme

FRS applies from the date that HMRC confirm it applies. The rate at which HMRC process anything is painfully slow. Add in the fact that we are a week from the SA deadline and it would be a miracle if HMRC replied before the 7th Feb (which is what OP is hoping for).

I've known applications for FRS to drag on for months. I would anticipate 4 - 8 weeks if I were to guess.

 

[Elijah Rose]

No it doesn't.

FRS applies from the date that HMRC confirm it applies. The rate at which HMRC process anything is painfully slow. Add in the fact that we are a week from the SA deadline and it would be a miracle if HMRC replied before the 7th Feb (which is what OP is hoping for).

I've known applications for FRS to drag on for months. I would anticipate 4 - 8 weeks if I were to guess.

So if a LTD for example is incorporated Dec 17th applied for FRS Jan 17th then HMRC would have to apply it from Dec 17th if not then what would they expect said person to pay in VAT (i was giving a example as if he had applied a month after . I can still be wrong always here to be informed correctly)

 

[Ziggy2024]

So if a LTD for example is incorporated Dec 17th applied for FRS Jan 17th then HMRC would have to apply it from Dec 17th if not then what would they expect said person to pay in VAT (i was giving a example as if he had applied a month after . I can still be wrong always here to be informed correctly)

You ask for the date you wish FRS to start and HMRC either accept or decline the request. If declined you would be required to use the standard VAT scheme. If accepted, HMRC will give a date that the FRS applies from (which may or may not align with the original request), you can't use FRS until this is confirmed.

 

[Elijah Rose]

You ask for the date you wish FRS to start and HMRC either accept or decline the request. If declined you would be required to use the standard VAT scheme. If accepted, HMRC will give a date that the FRS applies from (which may or may not align with the original request), you can't use FRS until this is confirmed.

You ask for the date you wish for it to start do they ask you that after being accepted because i didnt see that on the form

 

[Ziggy2024]

You ask for the date you wish for it to start do they ask you that after being accepted because i didnt see that on the form

It is on the form, how else would HMRC know when you want the scheme to start?

 

[Elijah Rose]

It is on the form, how else would HMRC know when you want the scheme to start?

"Enter the date you want your certification to start" was it asking for a past date or a current date? i would think its asking for a est time not the actual date if so would they change this or can i get them to change it ?

 

[Ziggy2024]

"Enter the date you want your certification to start" was it asking for a past date or a current date? i would think its asking for a est time not the actual date if so would they change this or can i get them to change it ?

They want the actual date. What have you applied for and what date did you put? You can ask HMRC to change the date, yes.

 

[Elijah Rose]

They want the actual date. What have you applied for and what date did you put? You can ask HMRC to change the date, yes.

i applied for frs i put the date i wanted it to start on the 22nd. Where would they give me the option to change it?

 

[Ziggy2024]

i applied for frs i put the date i wanted it to start on the 22nd. Where would they give me the option to change it?

Try ringing the VAT helpline, you might have to wait until the request is processed and then speak to them again. HMRC aren't obligated to change the date though, but hopefully you encounter a sympathetic operator.

 

[Elijah Rose]

Try ringing the VAT helpline, you might have to wait until the request is processed and then speak to them again. HMRC aren't obligated to change the date though, but hopefully you encounter a sympathetic operator.

Ok thank you but for some reason they dont accept it i would be charged the standard tax from 18th to the 22nd ? i would hope they understand and change it

 

[DWS]

Ok thank you but for some reason they dont accept it i would be charged the standard tax from 18th to the 22nd ? i would hope they understand and change it

As long as your FRS application is valid and all conditions are met then there should be no reasons why it should be refused, I would submit the VAT returns using the FRS even without confirmation and if in the unlikely event it is refused then appeal.
Had it in the past with a VAT application that HMRC have not confirmed the FRS so had to write in just put it on the record, still never received a reply from HMRC and continued to use FRS for years.
This is just my take on it but best to get advice from your Accountant

 

[Elijah Rose]

As long as your FRS application is valid and all conditions are met then there should be no reasons why it should be refused, I would submit the VAT returns using the FRS even without confirmation and if in the unlikely event it is refused then appeal.
Had it in the past with a VAT application that HMRC have not confirmed the FRS so had to write in just put it on the record, still never received a reply from HMRC and continued to use FRS for years.
This is just my take on it but best to get advice from your Accountant

As long as your FRS application is valid and all conditions are met then there should be no reasons why it should be refused, I would submit the VAT returns using the FRS even without confirmation and if in the unlikely event it is refused then appeal.
Had it in the past with a VAT application that HMRC have not confirmed the FRS so had to write in just put it on the record, still never received a reply from HMRC and continued to use FRS for years.
This is just my take on it but best to get advice from your Accountant

thanks this is great news i will probably do the same when approved just write in to say. Do you send the message via email ? just asking because if so i would most likely do the same

 

[DWS]

Don’t wait for it to be approved you could be waiting months!
I did this for clients hence why I said to go via your accountant.
I emailed the FRS team as well as posted letters as evidence, as I said HMRC still never replied but at least the application was documented.

 

[Newchodge]

I have applied to join the flat rate scheme. The application form was sent off Tuesday first class.

It is unlikely your letter has been opened yet. Mail is dealt with in the order in which it is received. It can easily take 2 weeks for a letter to be looked at.

 

[japancool]

It is unlikely your letter has been opened yet. Mail is dealt with in the order in which it is received. It can easily take 2 weeks for a letter to be looked at.

In fairness, since Karimbo asked that question 8 years ago, his letter has *probably* been opened by now, although I wouldn't bet money on it.

 

[Newchodge]

In fairness, since Karimbo asked that question 8 years ago, his letter has *probably* been opened by now, although I wouldn't bet money on it.

Whoops! He may even get a reply soon.

 

[Elijah Rose]

Don’t wait for it to be approved you could be waiting months!
I did this for clients hence why I said to go via your accountant.
I emailed the FRS team as well as posted letters as evidence, as I said HMRC still never replied but at least the application was documented.

i sent my application off

Don’t wait for it to be approved you could be waiting months!
I did this for clients hence why I said to go via your accountant.
I emailed the FRS team as well as posted letters as evidence, as I said HMRC still never replied but at least the application was documented.

What im asking is when i go to message them what do i direclty say . My application start date is inncorrect i would like it to be changed? would that be it and if my application hasn't been opened/approved yet should i continue to run my business knowing that when VAT returns happen im going to file through FRS

 

[DWS]

In fairness, since Karimbo asked that question 8 years ago, his letter has *probably* been opened by now, although I wouldn't bet money on it.

Just re read the thread and noticed the date now, you are correct to not bet money on it having been opened!

 

[Ziggy2024]

As long as your FRS application is valid and all conditions are met then there should be no reasons why it should be refused, I would submit the VAT returns using the FRS even without confirmation and if in the unlikely event it is refused then appeal.
Had it in the past with a VAT application that HMRC have not confirmed the FRS so had to write in just put it on the record, still never received a reply from HMRC and continued to use FRS for years.
This is just my take on it but best to get advice from your Accountant

Interestingly I have seen a similar response from a VAT expert on Accounting web so would have to say perhaps this is the practical thing to do.

My answer is the way that it is supposed to be done (and I have always had a response) but practically, as said it is months rather than weeks for a response.

In regard to the date difference, yes you should use standard VAT but if I've read correctly it is 5 days so unlikely to cause much of an issue if you start using the FRS earlier.

 

[Elijah Rose]

Interestingly I have seen a similar response from a VAT expert on Accounting web so would have to say perhaps this is the practical thing to do.

My answer is the way that it is supposed to be done (and I have always had a response) but practically, as said it is months rather than weeks for a response.

In regard to the date difference, yes you should use standard VAT but if I've read correctly it is 5 days so unlikely to cause much of an issue if you start using the FRS earlier.

date difference is dec 18th to 22nd jan

 

[Ziggy2024]

date difference is dec 18th to 22nd jan

Ok, my advice still stands then. You should be using standard VAT for that period, contact HMRC for advice and tell them you wish to change the date of the FRS application.

 

[DWS]

Interestingly I have seen a similar response from a VAT expert on Accounting web so would have to say perhaps this is the practical thing to do.

My answer is the way that it is supposed to be done (and I have always had a response) but practically, as said it is months rather than weeks for a response.

In regard to the date difference, yes you should use standard VAT but if I've read correctly it is 5 days so unlikely to cause much of an issue if you start using the FRS earlier.

I totally agree that your answer is correct and that is the right thing to do, however HMRC are making it increasingly hard to follow the correct procedures due to the time it’s takes to reply.
But as I said there should be no reason for the application to be denied as long as it is valid and all conditions are met, also make sure the correct % is being applied.
Another thing to consider when choosing the FRS is that any ‘profit’ made from the scheme is taxable.

 

[Elijah Rose]

Ok, my advice still stands then. You should be using standard VAT for that period, contact HMRC for advice and tell them you wish to change the date of the FRS application.

ive sent off a second application by email and notified them of the mistake hopefully that resolves the issue if not when they approve the first one i can just tell them there is a mistake

 

[Karimbo]

Update. Yes it did take an eternity to switch. I was really panicking and I delayed the VAT return until I got confirmation of the change.

I sent the letter, waited several weeks woith no response and then I phoned them up to chase irt and they sorted the problem out for me on the phone.

Thew switch date was backdated for me from the date the received the letter so I saved some £500 by going from standard to FRS.

My accounts show the Flate rate scheme surplus as an additional sales line after the sales. And every month since the change I've had a surplus I have probably saved tens of thousands of pounds over the years aftering making the swithc.

 

[Karimbo]

Elijah Rose said:


shouldn't be hard to calculate its just your profit/income divided by what your FRS percentage is

The FRS does not give you any allowances for VAT expempt/outside the scope. If you have a lot of sales made outside the UK (which are VAT expempty), the FRS rate will still apply to those sales - when they shouldn't. Same with goods that are zero rated.

If everything you sell is VATable - that makes the comparison very easy. If you have a high amount of exempt sales, they wont be exempt under FRS which uses a broad brush approach so you need to run the numbers to make sure FRS is better for you.


edit: also margin releif (2nd hand goods). If you are a gadget shop that buys and sells gadgets. You might buy an iPad from a customer for £150 and sell it for £200. Under margin relief you will pay VAT on that £50 so £8.33 VAT

Under flat rate scheme you will pay the other retail FRS rate of 7.5% on the £200 which would make the VAT on that iPad £15.

I beleive this example is correct, waiting for an Accountant to confirm this

 

[DWS]

The FRS does not give you any allowances for VAT expempt/outside the scope. If you have a lot of sales made outside the UK (which are VAT expempty), the FRS rate will still apply to those sales - when they shouldn't. Same with goods that are zero rated.

If everything you sell is VATable - that makes the comparison very easy. If you have a high amount of exempt sales, they wont be exempt under FRS which uses a broad brush approach so you need to run the numbers to make sure FRS is better for you.


edit: also margin releif (2nd hand goods). If you are a gadget shop that buys and sells gadgets. You might buy an iPad from a customer for £150 and sell it for £200. Under margin relief you will pay VAT on that £50 so £8.33 VAT

Under flat rate scheme you will pay the other retail FRS rate of 7.5% on the £200 which would make the VAT on that iPad £15.

I beleive this example is correct, waiting for an Accountant to confirm this

As far as I am aware ‘outside the scope’ is not included in FRS calculations

 

[David Griffiths]

As far as I am aware ‘outside the scope’ is not included in FRS calculations

That is correct. See section 6.3 of the HMRC publication.

 

[Karimbo]

Thanks for confirming, my technical understand of the difference between outside the scope/expempt and zero rate is a bit lacking. So I wasn't sure.

 

[Elijah Rose]

After reading this im just letting you know i do ecommerce the frs helps with tax making it income divided by percentage




I beleive this example is correct, waiting for an Accounta

The FRS does not give you any allowances for VAT expempt/outside the scope. If you have a lot of sales made outside the UK (which are VAT expempty), the FRS rate will still apply to those sales - when they shouldn't. Same with goods that are zero rated.

If everything you sell is VATable - that makes the comparison very easy. If you have a high amount of exempt sales, they wont be exempt under FRS which uses a broad brush approach so you need to run the numbers to make sure FRS is better for you.


edit: also margin releif (2nd hand goods). If you are a gadget shop that buys and sells gadgets. You might buy an iPad from a customer for £150 and sell it for £200. Under margin relief you will pay VAT on that £50 so £8.33 VAT

Under flat rate scheme you will pay the other retail FRS rate of 7.5% on the £200 which would make the VAT on that iPad £15.

I beleive this example is correct, waiting for an Accountant to confirm this

n

 

[Elijah Rose]

Update. Yes it did take an eternity to switch. I was really panicking and I delayed the VAT return until I got confirmation of the change.

I sent the letter, waited several weeks woith no response and then I phoned them up to chase irt and they sorted the problem out for me on the phone.

Thew switch date was backdated for me from the date the received the letter so I saved some £500 by going from standard to FRS.

My accounts show the Flate rate scheme surplus as an additional sales line after the sales. And every month since the change I've had a surplus I have probably saved tens of thousands of pounds over the years aftering making the swithc.

if you dont mind what number did you use to call in ?

 

[Karimbo]

if you dont mind what number did you use to call in ?

google it, in case you werent aware I am the OP and I did this over 7 years ago.

 

[Karimbo]

As far as I am aware ‘outside the scope’ is not included in FRS calculations

That is correct. See section 6.3 of the HMRC publication.

Out of curiosity are incentive payments outside the scope or standard rated? I am expecting my basnk to pay me £200 for switching to them. Is that outside the scope or some other treatment?

Can it be considered a credit towards future banking fees?

 

[Elijah Rose]

Hi everyone i wrote to HMRC back in January filling out the application to join the flat rate scheme they haven't wrote back or contacted me saying if i was accepted or not. In some way this could seem as good news because I no longer want to be enrolled on the scheme is it safe to say that it seems that the application wasn't seen or voided and it should no longer be a worry and i can pay my standard vat rate