Consider this. You mainly supply services to other business customers who are registered for VAT themselves.
You have very little expenditure where you would be able to claim VAT back. Depending on your type of business by using the FRS you can gain a financial advantage. For example: you invoice to your customer £100 plus VAT £20 = £120.
On checking HMRC’s rates for your business you decide that 12% is the correct rate. Your VAT to pay to HMRC is then £120 x 12% = £14.40. You have kept £5.60 of the VAT. The FRS can also be used by businesses already registered for VAT. As a bonus, there is a 1% discount using the FRS in the first year.
