What is VAT Flat Rate Scheme?

You charge customers the normal 20%, but pay HMRC a flat percentage of your VAT-inclusive turnover and generally do not reclaim VAT on purchases. You can join with turnover of £150,000 or less, and must leave above £230,000.

The catch is the limited cost business rule. If your goods cost less than 2% of turnover, or less than £1,000 a year, you are a limited cost business and pay 16.5%, a rate high enough that the scheme is usually worse than standard VAT for service businesses with few purchases.

There is a 1% discount in your first year as a VAT-registered business. Worth doing the arithmetic on your own numbers rather than assuming simpler means cheaper.