The best way to explain this is by way of an example. So let’s say the company provides accountancy services. The VAT flat rate for the first year is 13.5% and 14.5% the second year. So if for the first VAT flat rate return, the turnover is £15,000 gross for the period, the VAT is 13.5% of gross, which would be £2,025 due to HMRC.
Another example would be if a company specialised in photography, the VAT flat rate percentage is 10% then 11% in the following year. So if they make £1,500 gross in the second year for the period, the VAT charge would be £165 due to HMRC as it is 11% of gross profits.