In case your business is in an EU country that has adopted vat you’ll be able to opt for flat rate vat if you wish to simplify your accounting and stay away from presenting vat figures fully detail. This scheme enables 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 it is normally required whenever you file vat returns.
If you have a basic 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 fulfill the criteria put in place by the tax authorities inside your country. If your business is located in Great Britain then you can opt for vat flat rate if 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 http://vatnumbersearch.com touches £225,000.
Even though you will still have to display the vat amount in your vat invoice, you don’t need to keep an in depth account of your vat figures on the sale or purchase when 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 also offers a 1% discount scheme for the first year for firms that opt for this scheme. In case you deal in goods or services that fall under different vat rates then you’ll need to apply the top vat rate if you do go for this scheme.
Thus, if you purchase or sell goods or services under reduced vat rates or need to reclaim vat that has recently been paid then this scheme would not be ideal for you. However, should you mostly deal in goods or services that entail standard vat rates, don’t need to have any vat refund, or engage in retail sale then your vat flat rate scheme would be perfect for both you and your business. You can get added time to focus on growing your organization instead of spending 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 have to review eu vat rules if your organization is situated in another eu country. It is possible to join the flat rate vat scheme in your country by studying the rules and filling out the required vat form. You will probably need to find the classification of your services and goods so that you can 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 relevant vat authorities before making your move.
Although the system of vat is rather simple to apply, you will still require the services of an expert vat agent or consultant to assist you with vat calculations, vat returns and vat refunds. However, in case your business format is fairly simple and you offer limited services or goods that fall under standard vat rates then you can go in for the flat rate vat scheme to simplify your accounting.