If your business is in an EU country that 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 in full 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 it is normally required when you file vat returns.
For those who have a basic problem of being aware what is vat and foresee problems to maintain detailed vat accounts then you can certainly opt for the vat flat rate scheme provided you meetthe factors put in place by the tax authorities inside your country. If your organization is situated in the UK then you can go for vatcontrol.com 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. It is possible to remain under this scheme until your turnover touches £225,000.
Although you will still need to display the vat amount in your vat invoice, you don’t need to 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 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 businesses that choose this scheme. In case you offer services or goods that come under different vat rates then you will need to apply the top vat rate if you do go for this scheme.
Thus, if you buy or sell goods or services under reduced vat rates or have to reclaim vat that has recently been paid then this scheme wouldn’t be suitable for you. However, should you mostly deal in goods or services that entail standard vat rates, don’t need to go in for any vat refund, or engage in retail sale then your vat flat rate scheme will be ideal for you and your business. You can get added time to concentrate on growing your business instead of passing time on vat calculations while filing your returns would also become simpler.
These rules apply to businesses choosing the scheme in the UK. You will have to check on 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 checking out the rules and filling out the required vat form. You will also need to find the classification of the services and goods to be able to make use of the appropriate flat vat rate while billing your customers. You may 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 fairly easy to implement, you’ll still require services of expert vat agent or consultant to assist you with vat calculations, vat returns and vat refunds. However, in case your business format is fairly 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.