In case your company is in a EU country that has adopted vat then you can opt for flat rate vat if you wish to simplify your accounting and also be far from presenting vat figures in full 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 is normally required whenever you file vat returns.
If you 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 meet the criteria www.vatverification.com put in place by the tax authorities in your country. In case your organization is situated in the UK then you can certainly go for vat flat rate if your estimated sales turnover within the next year excluding vat is not over £150,000 or including vat is not 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 as part of your vat invoice, you need not keep an in depth account of your vat figures on your sale or purchase as you might need to do under normal vat circumstances. You will, however be unable to go for vat reclaim just 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 will have to apply the highest vat rate should you choose go for this scheme.
Thus, if you purchase or sell services or goods under reduced vat rates or have to reclaim vat that has already been paid then this scheme would not be ideal for you. However, should you mostly deal in services or goods that involve standard vat rates, don’t need to go in for any vat refund, or engage in retail sale then your vat flat rate scheme would be perfect for both you and your business. You could find added time to concentrate on growing your organization instead of spending time on vat calculations while filing your returns would also become simpler.
These rules pertain to businesses choosing the scheme in the UK. You will need to review eu vat rules if your organization is situated in another eu country. You can join the flat rate vat scheme in your country by studying the rules and completing the necessary vat form. You will probably need to find the classification of the goods and services so that you can make use of the appropriate flat vat rate while billing your clients. You may also leave the scheme to migrate to a different vat scheme by informing the appropriate vat authorities before making your move.
Even though the system of vat is fairly simple to apply, you’ll 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 kind of basic and you offer limited services or goods that come under standard vat rates then you can go for the flat rate vat scheme to simplify your accounting.