If you have clients that have been adversely affected by the new 'limited cost trader' test that was introduced on 1 April 2017, you should consider whether it will be more beneficial for them to leave the VAT Flat Rate Scheme (FRS) and revert to using traditional VAT accounting.

Businesses can leave the FRS at any time by notifying HMRC. To save any additional complications this is usually done at the end of their next VAT accounting period but can be done at any time. 

Businesses must also leave the scheme:

• On the anniversary of joining the scheme if the previous year's VAT-inclusive turnover was more than £230,000;
• If they expect their VAT inclusive turnover in the next 30 days alone will be more than £230,000;
• They start to use one of the other special schemes such as one of the margin schemes for second-hand goods, art, antiques and collectibles, the tour operators margin scheme, or the capital goods scheme;
• The business becomes part of a larger VAT group or division or becomes eligible to do so.

Businesses that leave the FRS may be able to make a stock adjustment and claim input tax when they leave the scheme. They need to follow the steps set out in HMRC’s guidance to find out if and how they need to make an adjustment. This will require a stock valuation (but not a formal stock-take). Businesses that leave the flat rate scheme are unable to re-join for at least 12 months.