Flat rate scheme
The flat rate scheme is one of the simplification schemes offered by HM Revenue & Customs for VAT administration.
The flat rate scheme uses a (flat) percentage multiplied the business sales (including VAT) in order to calculate the VAT due at the end of each quarter. The percentage a business uses is determined by the type of business, so a consultancy business could have a flat percentage rate of 14.5% whereas a photographer may use a percentage of 11%. Joining the scheme does not effect the VAT on your busness invoices.
For many contractors registering for VAT and using the flat rate scheme can save them money. See our blog on the details of the scheme with some worked examples.
Fixed assets, or capital assets, are the purchases that you make for the business that will be used for a year or more. Fixed asset is the term used in your business accounts by your accountant; the fixed asset note will disclose the purchase costs at the beginning of the year, your new purchases, disposals made during the year and the cost of the fixed assets that you still own at the end of the year.
The same note will also disclose the depreciation on the fixed assets brought forward at the beginning of the year, the depreciation for the year (see letter D for an explanation) and the depreciation at the end of the year.
The cost minus the depreciation is the Net Book Value.