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HMRC internal manual

VAT Flat Rate Scheme

Introduction: Law and regulations

The legal vires for the scheme with effect from 25 April 2002 are

Type of legislation Enactment
   
EU Council Directive 2006/112/EC (Article 281)
(Previously Article 24 of the Sixth VAT Directive)    
  Primary The VAT Act 1994, section 26B
  Secondary The VAT Regulations 1995, regulations 55A to 55V, inserted by the VAT (Amendment) (No.2) Regulations 2002 (which also made other consequential amendments).
  Tertiary Contained in Notice 733 and identified by the statement ‘The following rule has the force of law’ and by being placed in a box

The VAT (Amendment) Regulations 2003 subsequently amended the turnover limit and substituted a new Table of flat rates and trade sectors. It also introduced the reduced percentage for businesses that are within their first year of registration.

The VAT (Amendment) Regulations 2004 subsequently substituted a new Table of flat rates and trade sectors and provided transitional arrangements for couriers.