The new changes to the VAT Flat Rate Scheme that arrived on 1 April 2017 really focus the mind on what are goods. We’ve even pointed out how it’s almost worth buying stuff to throw away – see here!
The legal definition for the Flat Rate Scheme is:
“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 “Transport or storage, including couriers, freight, removals and taxis” and the flat-rate trader owns a vehicle for business use or holds a vehicle for business use under a lease;
(ii) any food or beverages for consumption by the flat-rate trader or employees of the flat-rate trader;
(iii) capital expenditure goods;
Hopefully time will give us a clearer idea of what HMRC mean by goods but for now here’s some pointers using a photographer as an example:-
A good implies there’s something you can touch and feel. We’d suggest a magazine would be a good whilst an online subscription to a magazine wouldn’t be.
Capital expenditure goods are things that will have an enduring benefit (eg a photographer buying a camera). However, other items a photographer might buy are more likely to be ‘consumables’ eg batteries, memory cards, hard drives, a camera bag you replace each year, stationery, printer ink etc.
Items that you supply to customers are likely to be goods (for example a photographer buying an album for a customer)
Things which aren’t goods will be services (for example, travel, paying other people, online software subscriptions)
To help keep this blog as relevant as possible email me and I’ll post the questions and replies here.
Jonathan trained as a chartered accountant with Price Waterhouse (now PWC) in Liverpool before becoming a small business services manager for Grant Thornton in Warrington. He also spent three years as the financial controller for Brookside and Hollyoaks (not that he ever mentions it!).
Jonathan is recognised as a specialist in the entertainment industry and is often called upon to provide training courses and seminars for media professionals. He's also a bit of a technology geek and has been recognised with the accountancy industry as one of the most progressive accountants in the UK. Outside of work Jonathan is very proud to be the Treasurer of the Tim Parry Johnathan Ball Foundation for Peace and to be on the Council of the Liverpool Institute of Performing Arts (LIPA)