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In an earlier article, CIOT Challenges HMRC on VAT Flat Rate Scheme and Bank Interest, we pointed out that the HMRC publication VAT Notice 733 ("Flat Rate Scheme for Small Businesses") which at the time had recently been updated, still advised that bank interest should be included in the Flat Rate Scheme calculation. (i.e., that VAT should be accounted for on bank interest income to a business registered under the Scheme).

We are pleased to note that Notice 733 has been updated again - Flate Rate Scheme for Small Businesses - and now reflects that bank interest should not be included in the VAT calculation. (What has Changed?).

As per our earlier article, this helpful change has been brought about by the efforts of two tax advisers, Mike Thexton and Neil Warren, who challenged HMRC's original stance - that VAT should be accounted for - all the way to the First Tier Tribunal.