In case your company is in an EU country that has adopted vat then you can opt for flat rate vat if you wish to simplify your accounting and stay away from presenting vat figures fully detail. This scheme allows you to simply calculate a prescribed percentage of your vat inclusive sales as the final vat figure without going into intricate sale or purchase details, as is normally required when you file vat returns.
For those who have a fundamental problem of understanding what is vat and foresee problems to maintain detailed vat accounts then you can opt for the vat flat rate scheme provided you meet the criteria www.vatverification.com set up by the tax authorities inside your country. If your organization is situated in Great Britain then you can opt 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. You can remain under this scheme until your turnover touches £225,000.
Although you will still need to display the vat amount as part of your vat invoice, you need not keep a detailed account of your vat figures on your sale or purchase when you might need to do under normal vat circumstances. You will, however not be able to go in for vat reclaim in case you choose the flat rate vat scheme. UK offers a 1% discount scheme for the 1st year for businesses that opt for this scheme. In case you offer services or goods that fall under different vat rates then you’ll need to apply the top vat rate if you do opt for this scheme.
Thus, if you buy or sell services or goods under reduced vat rates or need to reclaim vat which has recently been paid this scheme would not be ideal for you. However, if you mostly offer goods or services that entail standard vat rates, do not need to have any vat refund, or take part in retail sale then your vat flat rate scheme would be ideal for both you and your business. You could find more time to concentrate on growing your business instead of passing time on vat calculations while filing your returns would also become simpler.
These rules pertain to businesses choosing the scheme in the UK. You will need to check on eu vat rules in case 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 necessary vat form. You will probably need to find the classification of your services and goods so that you can make use of the appropriate flat vat rate while billing your clients. You can also leave the scheme to migrate to another vat scheme by informing the appropriate vat authorities prior to making your move.
Although the system of vat is fairly simple to apply, you will 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 services or goods that come under standard vat rates you’ll be able to go for the flat rate vat scheme to simplify your accounting.