Policy paper

VAT: tackling aggressive abuse of the Flat Rate Scheme

This tax information and impact note applies to labour only businesses.



The measure will introduce a new 16.5% Flat Rate Scheme (FRS) rate for businesses with limited costs, such as many labour only businesses. This will prevent abuse and make the FRS fairer. This will reduce the incentive for firms and agencies to move employees to self-employment to exploit VAT simplification aimed at small businesses.

Draft legislation relating to this measure has now been published.

Published 5 December 2016