The amount of VAT a business pays or claims back from HM Revenue and Customs (HMRC) is usually the difference between the VAT charged by the business to customers and the VAT the business pays on their own purchases.
With the Flat Rate Scheme:
you pay a fixed rate of VAT (external link) to HMRC
you keep the difference between what you charge your customers and pay to HMRC
you can’t reclaim the VAT on your purchases - except for certain capital assets over £2,000 (external link)
To join the scheme your VAT turnover must be £150,000 or less (excluding VAT), and you must apply to HMRC.
Talk to an accountant or tax adviser (external link) if you want advice on whether the Flat Rate Scheme is right for you.