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HMRC internal manual

VAT Flat Rate Scheme

From
HM Revenue & Customs
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Treatment of Applications: Why are there so many exclusions?

Experience of other facilitation measures shows that they are often exploited by businesses for which they were never intended. There are three categories of exclusion, details of which are held in Regulation 55L(1) of VAT Regulations 1995:

  • To discourage the non-compliant.

Examples are cases where the applicant has been involved in fraud or civil evasion.

  • To simplify the scheme.

An example is the exclusion of those using the second hand margin scheme. Tour operators are excluded because the Tour Operators’ Margin Scheme (TOMS) is mandatory under EC law.

  • To prevent avoidance.

FRS6000 provides further information