What happens if a business's taxable turnover reaches £250,000?

When a business's taxable turnover reaches £250,000, it is required to leave the flat rate scheme. This threshold is significant because the flat rate scheme is intended for smaller businesses and is designed to simplify tax reporting. However, once a business exceeds this turnover limit, it is no longer eligible to remain in this simplified scheme.

Leaving the flat rate scheme means the business will need to transition to a different scheme, where they will need to account for VAT in a conventional manner. This entails charging VAT on their sales and recovering VAT on their purchases based on actual amounts rather than a fixed percentage of turnover. This change reflects the need for more comprehensive VAT accounting as the business grows and its operations become more complex.

In contrast, options like applying for a refund or qualifying for additional benefits do not apply directly to the situation described. These choices do not address the regulatory requirement linked to exceeding the turnover limit under the flat rate scheme.