[F1PART VIIAU.K.FLAT-RATE SCHEME FOR SMALL BUSINESSES

Interpretation of Part VIIAU.K.

55A.—(1) In this Part—

• F2...

• “capital expenditure goods” means any goods of a capital nature but does not include any goods acquired by a flat-rate trader (whether before he is a flat-rate trader or not)—

  (a)

  for the purpose of resale or incorporation into goods supplied by him,

  (b)

  for consumption by him within one year, or

  (c)

  to generate income by being leased, let or hired;

• F3...

• [F4“EDR” means the day with effect from which a person is registered under the Act;]

• “end date” has the meaning given in regulation 55Q(2);

• “flat-rate trader” means a person who is, for the time being, authorised by the Commissioners in accordance with regulation 55B(1);

• “relevant purchase” has the meaning given in regulation 55C;

• “start date” has the meaning given in regulation 55B(2);

• “the scheme” means the flat-rate scheme for small businesses established by this Part;

• “the Table” means the table set out in regulation 55K.

(2) For the purposes of this Part, a person is associated with another person at any time if that other person makes supplies in the course or furtherance of a business carried on by him, and—

(a)the business of one is under the dominant influence of the other, or

(b)the persons are closely bound to one another by financial, economic and organisational links.

[F5(3) For the purposes of this Part, “relevant date”, in relation to a flat-rate trader, means any of the following—

(a)his start date;

(b)the first day of the prescribed accounting period current at any anniversary of his start date;

(c)any day on which he first carries on a new business activity;

(d)any day on which he no longer carries on an existing business activity;

(e)any day with effect from which the Table is amended in relation to him;

(f)where regulation 55JB (reduced rate for newly registered period) applies—

(i)the day that his newly registered period begins, and

(ii)the first anniversary of his EDR.]

[F6(4) For the purposes of this Part, “limited-cost trader” is a flat-rate trader whose expenditure on relevant goods in any prescribed accounting period, together with any VAT chargeable on that expenditure, is less than the specified amount, and—

(a)“relevant goods” are goods used or to be used by a flat-rate trader exclusively for the purposes of the trader’s business but excluding the following—

(i)vehicles, vehicle parts and fuel except where the category of business applicable to the flat-rate trader in the Table is, in that prescribed accounting period, “Transport or storage, including couriers, freight, removals and taxis” and the flat-rate trader owns or leases a vehicle for that business;

(ii)food or beverages for consumption by the flat-rate trader or employees of the flat-rate trader;

(iii)capital expenditure goods;

(iv)goods for the purpose of resale, leasing, letting or hiring out except where the main business activity of the flat-rate trader ordinarily consists of selling, leasing, letting or hiring out such goods;

(v)goods for disposal as promotional items, gifts or donations;

(b)“specified amount” is the higher of—

(i)2 per cent of the trader’s relevant turnover in the prescribed accounting period; and

(ii)where the prescribed accounting period is one year, £1000, and, in any other case, such proportion of £1000 as the length of the accounting period bears to the period of one year.]]