Benefits of the VAT Flat Rate Scheme for Mobile Caterers

There can be many benefits of the VAT Flat Rate Scheme that mobile caterers can access.

Understanding the business side of any catering venture is essential if you are going to succeed. The VAT Flat Rate Scheme (FRS) essentially does what it says on the tin – meaning you pay a fixed rate of VAT to HMRC on the money your business takes in. Furthermore, you keep the difference between what you charge customers and the fees you pay to HMRC, but also it is worth noting that under this scheme you cannot reclaim the VAT on purchases (exceptions allow for some capital assets costing over £2,000).

The FRS is available for businesses that have a turnover less than £150,000 per annum, and can be accessed via applying to HMRC.

So how can this scheme be of benefit to mobile caterers?

The FRS offers a much more simplified and streamlined method when it comes to calculating VAT liabilities – so instead of having to deal with each individual sale and purchase, caterers can simply apply a fixed percentage to their gross turnover. For any mobile business that may be operating with limited resources, this can significantly reduce administrative burdens.

Being able to keep the difference between the VAT businesses charge, and the VAT they pay to HMRC as alluded to above, is beneficial for the cash flow of the business.

Mobile caterers can qualify for a lower VAT rate under this scheme, depending on the sector they operate in. This can mean taking advantage of reduced VAT rates and therefore allowing businesses to increase their profitability.

To find out more about how the VAT Flat Rate Scheme can be of benefit to mobile caterers, read the full summary from James, Stanley & Co here.

NCASS works closely with their sub-division The Catering Accounting Company, and NCASS members can gain 20% off The Catering Accounting Company’s services – click here for more information.

Listen to our podcast episode discussing Planning for Profit with Andrew James of The Catering Accounting Company here.

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