HMRC have introduced changes to the VAT Flat Rate Scheme. HMRC have introduced a new flat rate percentage of 16.5% from 1 April 2017 and your standard percentage will change to this for each quarter if you are classed as a limited cost trader. Limited cost traders are businesses which spend less than 2% of their VAT inclusive turnover on goods. For this purpose goods exclude capital expenditure(equipment) and food and drink, but for example includes stationery and we believe that these changes will affect a large proportion of businesses on the flat rate scheme.
Due to the way the flat rate VAT is calculated it could mean your business would be more beneficial to come off the scheme or de-register for VAT altogether (if your turnover is below the £83,000 VAT de-registration threshold). By coming off the Flat Rate scheme you would need to start accounting for VAT on the normal scheme by claiming back VAT on expenses and one of the disadvantages with this is the administration burden of doing so but do be aware you are not required to reclaim VAT on every item and can reclaim only the VAT you wish to.