In case your company 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 stay away from presenting vat figures in full detail. This scheme allows you to simply calculate a prescribed amount of your vat inclusive sales as the final vat figure without going into intricate sale or purchase details, as it is normally required when you file vat returns.
If you have a fundamental problem of understanding what is vat and foresee problems in maintaining detailed vat accounts then you can certainly opt for the vat flat rate scheme provided you fulfillthe factors set up by the tax authorities in your country. In case your organization is located in the UK then you can go for vat flat rate in case your estimated sales turnover in the next year excluding vat is not over £150,000 or including vat is not over £187,500. It is possible to remain under this scheme until your turnover vatnumbersearch.com touches £225,000.
Although you will still have to display the vat amount as part of your vat invoice, you don’t need to keep an in depth account of your vat figures on your sale or purchase as you would have to do under normal vat circumstances. You’ll, however not be able to go for vat reclaim just in case you opt for the flat rate vat scheme. UK also offers a 1% discount scheme for the first year for businesses that opt for this scheme. If you happen to deal in services or goods that come under different vat rates then you’ll 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 that has recently been paid this scheme would not be ideal for you. However, should you mostly deal in goods or services that involve standard vat rates, do not need to go in for any vat refund, or engage in retail sale then your vat flat rate scheme will be perfect for both you and your business. You can get added time to focus on growing your organization rather than passing time on vat calculations while filing your returns would also become simpler.
These rules apply to businesses opting for the scheme in the United Kingdom. You will need to review eu vat rules in case your organization is located in another eu country. It is possible to join the flat rate vat scheme within your country by checking out the rules and completing the required vat form. You will probably need to find out the classification of the goods and services to be able to use the appropriate flat vat rate while billing your clients. You can also leave the scheme to migrate to a different vat scheme by informing the appropriate vat authorities before making your move.
Although the system of vat is fairly simple to apply, you’ll still require services of expert vat agent or consultant to help you with vat calculations, vat returns and vat refunds. However, if your business format is kind of basic and you deal in limited goods or services that fall under standard vat rates you’ll be able to go for the flat rate vat scheme to simplify your accounting.