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HMRC internal manual

VAT Flat Rate Scheme

Policy and Background: Why was the scheme introduced?

The scheme was introduced as a response to growing concerns about the complexity and compliance costs of VAT for small businesses. It reduces the cost of complying with VAT obligations by simplifying the way that VAT due to HMRC is calculated. Use of the scheme should be encouraged, as it is an important part of our response to the high level objective of reducing compliance costs. You should take the opportunity to discuss this and other schemes whenever contact is made with an eligible business.