If your business 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 far from presenting vat figures in full detail. This scheme allows you to simply calculate a prescribed amount 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 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 fulfillthe factors www.vatverification.com put in place by the tax authorities in your country. In case your organization is located in the UK then you can certainly opt for vat flat rate in case your estimated sales turnover within the next year excluding vat isn’t 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 have to display the vat amount as part of your vat invoice, you need not keep a detailed account of the 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 in case you choose the flat rate vat scheme. UK offers a 1% discount scheme for the first year for businesses that opt for this scheme. If you happen to offer goods or services that come under different vat rates then you’ll have to apply the highest vat rate if you do go for this scheme.
Thus, if you buy or sell goods or services under reduced vat rates or need to reclaim vat that has recently been paid this scheme wouldn’t be suitable for you. However, if you mostly offer goods or services 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 will be perfect for both you and your business. You could find more time to focus 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 check on eu vat rules if your business is located in another eu country. It is possible to join the flat rate vat scheme within your country by checking out the rules and filling out the necessary vat form. You will also must 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 may also leave the scheme to migrate to another vat scheme by informing the relevant vat authorities prior to making your move.
Even though the system of vat is fairly 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 fairly simple and you offer limited services or goods that fall under standard vat rates then you can go for the flat rate vat scheme to simplify your accounting.