Step Transaction Doctrine.
This is why the plan runs afoul of IRS regs. From the linked IRS doc -
"Under the step transaction doctrine, "a series of transactions
designed and executed as parts of a unitary plan to achieve an
intended result ... will be viewed as a whole regardless of whether
the effect of so doing is imposition of or relief from ...
Disclaimer: I am not a tax consultant, so I can not provide any personal tax advise. So this is a layman interpretation which might not be factually accurate or which glosses over details which might be relevant in your personal case. If you want proper tax advise, please consult a licensed tax consultant.
Various German sources agree that you can deduct ...
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 ...
Not sure it would as you pay income tax not your company.
If you decided to pay your self less salary or changed the way you handled staff pensions vial salary sacrifice for example - this could effect both your tax bill and the companies.