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  Introduction to the VAT Flat Rate Scheme The  VAT Flat Rate Scheme , a simplified VAT system introduced by the UK government, aims to ease the VAT accounting burden for small businesses. This scheme allows eligible businesses to streamline VAT calculations and payments to HMRC. How the VAT Flat Rate Scheme Works Under the VAT Flat Rate Scheme, businesses pay a fixed percentage of their total turnover to HMRC as VAT. This percentage is determined based on the industry the business operates in. The set percentage considers the typical VAT payable on sales for that specific industry. When using the Flat Rate Scheme for VAT, businesses are not required to record VAT on each sale and purchase. However, they cannot reclaim VAT on their purchases, except for certain capital assets costing £2,000 or more, including VAT. VAT Flat Rate Scheme Eligibility Businesses with an annual taxable turnover of £150,000 or less (excluding VAT) are eligible to join the VAT Flat Rate Scheme. Moreover, busin