In case your business is in an EU country that has adopted vat then you can choose flat rate vat if you wish to simplify your accounting and also be far from presenting vat figures fully detail http://vatcheck.com. 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 whenever 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 certainly opt for the vat flat rate scheme provided you meet the criteria put in place by the tax authorities inside your country. In case your organization is located 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 in your vat invoice, you need not keep a detailed account of the vat figures on your sale or purchase as you would have to do under normal vat circumstances. You will, however be unable to go in for vat reclaim in case you opt for 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’ll have 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 need to reclaim vat which has already been paid then this scheme would not be ideal for you. However, should you mostly deal in goods or services that involve standard vat rates, do not need to have any vat refund, or take part in retail sale then your vat flat rate scheme would be ideal for both you and your business. You could find more time to concentrate on growing your business rather than passing time on vat calculations while filing your returns would also become simpler.
These rules apply to businesses opting for the scheme in the UK. You will have to review eu vat rules if your organization is located in another eu country. You can join the flat rate vat scheme within your country by checking out the rules and completing the necessary vat form. You will also must find out the classification of your goods and services so that you can use the appropriate flat vat rate while billing your clients. You may also leave the scheme to migrate to another vat scheme by informing the appropriate vat authorities before 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 fairly basic and you deal in limited goods or services that fall under standard vat rates you’ll be able to go for the flat rate vat scheme to simplify your accounting.