I have a problem with a client who, at his last VAT quarter, was over the turnover threshold for the Flat Rate VAT. (His turnover for the 12 months preceding was £237k, so some £7k over.) I rang HMRC, and they seemed quite casual about it all, saying if I/he felt it was just a 'blip' and he was likely to go back below, then to leave it, but if it continued to stay above, then to write to them and they would give a date to revert to the standard vat scheme.
Well I have just seen him again, and he is having a cracking December, which means this quarter will again take him over the threshold, but he says that January will be dead, and so its likely he'll be back under again then. He doesn't want to move off the Flat Rate until he has to, but understands that the return I am about to do covering Oct-Dec, will again take him over the limit.
So, my question is, has anyone experienced this? If HMRC were to investigate, what fines might he get for staying on the flat rate a little longer than he should have done? The way the guy at HMRC spoke, he said most businesses aren't aware they have gone just over the limit, until it is really obvious. I have searched the net, and all I can find is the referral that you need to come off it once you are over the £230k for a 12 month period - I can find nothing saying what will happen if you don't inform them straight away. Or if HMRC would back date him on the Standard Rate Scheme to the time he went over, so the last return and this would have to be redone on the standard scheme.
Any advice on this, and how to proceed would be greatly appreciated??
