This is not correct. The way the flat rate VAT scheme works is you add VAT to your bill, then pay 14.5% of your "flat rate turnover" to HMRC. Flat rate turnover includes the VAT.
For example, let's say you did £100 worth of work for a client. You invoice them for £100 + 20% VAT = £120 in total. You must then pay 14.5% of £120 to HMRC (i.e. £17.40).
So if you plan to sell work to an oversea company in the future, make sure to get off the simplified VAT scheme beforehand. I know I will, come november, the shackles aren't really worth the tiny little money you get in the end.
It seems absurd to make a company pay back a VAT amount that it has not perceived.
Incredibly bizarre that as a small company, you try to 'export' and thus bring cash back into the economy, and are in fact actively prevented from doing so when on that scheme.
Also, on FRS you can claim a single £2k expense annually.