From 1st April 2017, Businesses that are under Flat Rate Scheme and those who intend to be so registered are required to carry a check on themselves if they are Limited Cost Trader. According to the Government, this is to check the Aggressive abuse of the VAT Flat Rate Scheme.
Limited Cost trader is a situation where VAT inclusive expenditure on goods is either:
They will then be placed on 16.5 VAT rate if the above subsists
In regards to businesses that purchase no goods it is obvious that they will be on 16.5 VAT rate.