In case your company is in an EU country which has adopted vat then you can opt for flat rate vat if you want to simplify your accounting and stay far from presenting vat figures in full 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 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 in maintaining detailed vat accounts then you can certainly opt for the vat flat rate scheme provided you fulfillthe factors www.vatverification.com put in place by the tax authorities in your country. In case your business 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 isn’t 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.
Even though you will still have to display the vat amount in your vat invoice, you need not keep an in depth account of your vat figures on your sale or purchase when you would have to do under normal vat circumstances. You’ll, however not be able to go in for vat reclaim in case you choose the flat rate vat scheme. UK also offers a 1% discount scheme for the 1st year for firms that opt for this scheme. If you happen to 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 services or goods under reduced vat rates or need to reclaim vat which has recently been paid then this scheme wouldn’t be suitable for you. However, should you mostly deal in services or goods that involve standard vat rates, do not need to go in for any vat refund, or engage in retail sale then the vat flat rate scheme will be perfect for both you and your business. You can get more time to concentrate on growing your business instead of spending 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 review eu vat rules if your organization is situated 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 necessary vat form. You will also need to find out the classification of the services and goods so that you can make use of the appropriate flat vat rate while billing your customers. You can also leave the scheme to migrate to another 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 help you with vat calculations, vat returns and vat refunds. However, in case your business format is kind of simple and you deal in limited goods or services that fall under standard vat rates then you can go for the flat rate vat scheme to simplify your accounting.