If your company is in an EU country which has adopted vat you’ll be able to opt for flat rate vat if you want to simplify your accounting and also be 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 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 opt for the vat flat rate scheme provided you meet the criteria set up by the tax authorities in your country. In case your business is located in Great Britain then you can certainly opt for vat flat rate in case 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 https://vatnumbersearch.com touches £225,000.
Although you will still need to display the vat amount as part of your vat invoice, you don’t need to keep a detailed account of the vat figures on the sale or purchase as you might need to do under normal vat circumstances. You will, however not be able to go for vat reclaim in case you choose the flat rate vat scheme. UK also offers a 1% discount scheme for the 1st 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 need to apply the highest vat rate should you choose opt for this scheme.
Thus, if you buy or sell goods or services under reduced vat rates or have to reclaim vat which has recently been paid then this scheme wouldn’t be ideal for you. However, if you mostly offer services or goods that entail standard vat rates, do not need to go in for any vat refund, or engage in retail sale then your vat flat rate scheme would be perfect for 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 pertain to businesses opting for the scheme in the United Kingdom. You will have to check on eu vat rules in case your business is located 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 also need to find out the classification of your goods and services so that you can use the appropriate flat vat rate while billing your customers. You may also leave the scheme to migrate to another vat scheme by informing the relevant vat authorities prior to making your move.
Although the system of vat is fairly easy to implement, you will still require the services of expert vat agent or consultant to help you with vat calculations, vat returns and vat refunds. However, if your business format is fairly basic and you offer 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.