: What's the point of a 20% (alias 16.5%) VAT flat rate in UK? The normal VAT in UK is already 20%. Note that 16.5% VAT flat rate for £100 is not £16.5 but £20.0. HMRC does not calculate like any other country I know. The

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The 16.5% rate applies to businesses that spend less than 2% of their turnover, or less than £1,000 on goods. It was raised in 2017, probably because the normal flat rates are too favourable for such businesses.

As you say, the precise calculation gives £19.80, so it's still marginally favourable if total costs are less than 1%. Or people might choose it to limit their administrative effort, even though they lose out slightly in actual tax paid.