In case your business is in a EU country which has adopted vat you’ll be able to choose flat rate vat if you want to simplify your accounting and also be far from presenting vat figures fully detail. This scheme allows you to simply calculate a prescribed amount of your vat inclusive sales as being the final vat figure without going into intricate sale or purchase details, as is normally required when you file vat returns.
If you have a fundamental problem of being aware what is vat and foresee problems in maintaining detailed vat accounts then you can choose the vat flat rate scheme provided you meetthe factors set up by the tax authorities inside your country. In case your business is located in the UK then you can certainly go for vat flat rate in case your estimated sales turnover within the next year excluding vat is not over £150,000 or including vat isn’t over £187,500. You can remain under this scheme until your turnover vatnumbersearch.com touches £225,000.
Although you will still need to display the vat amount as part of your vat invoice, you don’t need to keep an in depth account of the vat figures on your sale or purchase as you might need to do under normal vat circumstances. You will, however be unable to go in for vat reclaim just in case you choose the flat rate vat scheme. UK offers a 1% discount scheme for the 1st year for firms that opt for this scheme. In case you deal in goods or services that fall under different vat rates then you will have to apply the highest vat rate should you choose opt for this scheme.
Thus, if you purchase or sell goods or services under reduced vat rates or have to reclaim vat which has already been paid this scheme would not be suitable for you. However, if you mostly deal in services or goods that entail standard vat rates, do not need to have any vat refund, or take part in retail sale then the vat flat rate scheme will be perfect for both you and your business. You could find more time to concentrate on growing your organization instead of passing time on vat calculations while filing your returns would also become simpler.
These rules pertain to businesses opting for the scheme in the UK. You will need to check on eu vat rules if your business is situated in another eu country. You can join the flat rate vat scheme in your country by studying the rules and filling out the required vat form. You will also need to find out the classification of the goods and services to be able to make use of the appropriate flat vat rate while billing your clients. You may also leave the scheme to migrate to a different vat scheme by informing the appropriate vat authorities prior to making your move.
Even though the system of vat is rather simple to apply, you’ll still require services of an expert vat agent or consultant to assist you with vat calculations, vat returns and vat refunds. However, if your business format is fairly basic and you offer limited goods or services that come under standard vat rates you’ll be able to go for the flat rate vat scheme to simplify your accounting.