State turnover for each of the last 12 months and the projection for the next 6 months. The tool computes the rolling 12-month total and flags the month you crossed or will cross £90,000.

Categorise sales by VAT status: standard-rated (20%), reduced-rate (5%), zero-rated (0%, e.g. food, books, children's clothes), exempt (e.g. financial services, education), outside scope. Only taxable supplies (standard, reduced, zero) count toward the threshold; exempt does not.

Estimate B2B vs B2C share of revenue. The tool models the impact of adding VAT: B2B is largely neutral; B2C either loses customers or compresses margin by up to 16.7% net.

Result panel compares standard VAT (full input/output reclaim) vs Flat Rate Scheme at your sector's rate. Includes the 1% first-year discount on Flat Rate, and the limited-cost-trader test that bumps you to 16.5%.

If you are below threshold but have significant input VAT (capital purchases, premises costs, large supplier invoices), the tool quantifies the reclaim opportunity and the customer perception benefit of looking established.

Decision panel outputs: must register by date X / voluntarily register / stay under threshold / de-register. With reasoning, expected cash impact and a Making Tax Digital readiness checklist.

The £90,000 threshold is checked against any rolling 12-month window, not your accounting year. At the end of each calendar month you must look back 12 months — if turnover crosses, you must register within 30 days.

Forward-look: if you expect turnover to cross £90,000 in just the next 30 days alone (e.g. signing a £100,000 contract), you must register by the end of that 30-day period without waiting for the rolling test.

FRS pays HMRC a flat percentage of gross VAT-inclusive turnover. Sector rates 2025/26 examples:

• IT consultants: 14.5%
• Management consultants: 14%
• Hairdressers: 13%
• Computer repair: 10.5%

Limited cost trader test: if VAT-inclusive goods spend is under 2% of turnover (or under £1,000 a year), you pay the punitive 16.5% rate which usually makes FRS worse than standard VAT.

FRS is most attractive to service businesses with low-cost overhead and B2B clients.

If a B2C trader keeps prices fixed after crossing the VAT threshold, the impact on net revenue is 1 - 1/1.2 = 16.67%. A £100 sale becomes £83.33 net of VAT.

If they raise prices to keep net margin, customers see a 20% rise. Many lose 20-40% of price-sensitive customers.

Strategies to manage:

• Keep turnover deliberately under £90,000 by limiting capacity
• Restructure into multiple businesses where genuinely separate
• Plan a phased price rise just before registration
• Flat Rate Scheme to keep some of the cushion

Voluntary registration helps when:

• Your customers are mostly VAT-registered businesses
• You have significant standard-rated input costs (premises, equipment, software)
• You are buying capital assets (vehicles, machinery) and want to reclaim VAT
• Looking VAT-registered improves credibility with larger clients

Voluntary registration hurts when:

• Most customers are consumers
• Inputs are largely zero-rated, exempt or out of scope
• You are price-sensitive in a B2C market

All VAT-registered businesses must comply with Making Tax Digital (MTD) for VAT, regardless of turnover. This requires:

• Keeping VAT records in a digital format
• Submitting VAT returns through MTD-compatible software (not the old HMRC portal)
• Maintaining a digital link between systems where multiple are used

Compatible software includes Xero, QuickBooks, FreeAgent, Sage and many others. Spreadsheet plus bridging software remains valid if a digital link is preserved.