In case your business 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 stay far from presenting vat figures in full detail Vatcheck.com. This scheme allows you to simply calculate a prescribed percentage of your vat inclusive sales as being the final vat figure without going into intricate sale or purchase details, as is normally required whenever you file vat returns.
For those who have a fundamental problem of understanding what is vat and foresee problems in maintaining detailed vat accounts then you can certainly choose the vat flat rate scheme provided you meet the criteria put in place by the tax authorities in your country. If your organization is located in the UK then you can certainly opt for vat flat rate if 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.
Even though 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 would have to do under normal vat circumstances. You’ll, 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 firms that choose this scheme. If you happen to offer goods or services that fall under different vat rates then you will have to apply the top vat rate should you choose go for this scheme.
Thus, if you purchase or sell goods or services under reduced vat rates or need to reclaim vat which has recently been paid then this scheme wouldn’t be suitable for you. However, if you mostly offer goods or services that entail standard vat rates, don’t need to have any vat refund, or engage in retail sale then your vat flat rate scheme would be perfect for both you and your business. You can get added time to focus on growing your organization rather than spending time on vat calculations while filing your returns would also become simpler.
These rules apply 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 within your country by checking out the rules and filling out the necessary vat form. You will also need to find the classification of your goods and services to be able to use the appropriate flat vat rate while billing your clients. You can also leave the scheme to migrate to a different vat scheme by informing the relevant vat authorities before making your move.
Even though 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, if your business format is kind of basic and you deal in limited services or goods that come under standard vat rates then you can go in for the flat rate vat scheme to simplify your accounting.