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I often find that many franchisees are paying more VAT than they should be. Sometimes this is due to them not using the most efficient scheme for their business, and in other cases, it is simply down to poor advice.

If you are providing supplies to the end consumer, VAT is ultimately an additional cost to your business and as such, you should consider the following:

Flat Rate VAT
If you are operating a small business, it may be advantageous for you to consider the flat rate scheme for VAT. HM Revenue & Customs have published a list of flat rates that can be applied to your turnover rather than using the standard rate of VAT. As this list is industry specific, you might find that the industry standard flat rate for your franchised operation is a lower effective rate than the amount that you are paying at present. In these cases it would be potentially advisable to register under the flat rate scheme.

Caution should be taken as the flat rate is applied to the total supplies of any taxable person, so you should consult your adviser in relation to this. For example, if you run your franchise as a sole trade, and also have a buy to let property in your own name, you might inadvertently pay over flat rate VAT on both streams of income. Read on…

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