Which Flat Rate Scheme rate should I apply to a client who produces work in more than one industry category?
Q: I am looking to VAT register my client and put them on the Flat Rate Scheme. He is a script writer for films/TV programmes but also writes books. We are not sure if he should apply the 12.5% rate for 'Entertainment and Journalism' or 13% for 'Film, radio, television or video production'? Which rate should we use?
A: For the FRS, where income could feasibly fit into more than one sector, you should select the sector that you judge to be most appropriate to your main (by turnover) business activity. As long as this choice is not unreasonable, HMRC could only challenge on a go-forward basis.
HMRC considers authors and journalists to fall under the 12.5% entertainment sector and recording and production services to fall under the 13% film production sector. On balance, script writing seems more similar to author and journalism work than recording and production work, but ultimately this is for the business to make a judgement on in light of its particular circumstances.