AN accountant is warning business owners to be wary of pitfalls related to a new VAT flat rate.

Dave Forrester – of TaxAssist Accountants, which has offices in Silsden and Cross Hills – said the new rate, announced in the Chancellor's recent Autumn Statement, might not benefit some businesses.

"Many service-based local business owners – such as IT contractors and consultants – already utilise the optional VAT flat rate scheme to simplify their tax affairs, but it is vital they check if the newly-imposed 16.5 per cent rate applies to them.

"Although the new rate does not go live until April next year, it could mean that the scheme is no longer beneficial for them and they may have to revert to standard VAT accounting. But they must take action before the new rate is introduced.

"The Government wants to crack down on the minority of businesses which misuse the scheme, but we are keen to ensure that local business owners who play by the rules do not get caught out by the changes."

Businesses whose income totals under £150,000 are eligible to use the VAT flat rate scheme, which applies a set percentage to their turnover rather than them having to record the VAT on each sale and purchase.