If your company is in a EU country which has adopted vat you’ll be able to choose flat rate vat if you wish to simplify your accounting and stay away from presenting vat figures in full 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 whenever you file vat returns.
If you have a basic problem of being aware what is vat and foresee problems in maintaining detailed vat accounts then you can 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 business is situated in the UK then you can go for vat flat rate in case your estimated sales turnover in 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 touches £225,000.
Even though you will still need to display the vat amount in 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’ll, however not be able to go in for vat reclaim just in case you choose the flat rate vat scheme. UK offers a 1% discount scheme for the first year for firms that choose this scheme. If you happen to deal in goods or services that come 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 services or goods under reduced vat rates or have to reclaim vat which has recently been paid then this scheme wouldn’t be suitable for you. However, should you mostly offer goods or services that entail standard vat rates, don’t need to go in for any vat refund, or take part in retail sale then your vat flat rate scheme would be ideal for you and your business. You could find added time to focus on growing your organization 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 United Kingdom. You will have to review eu vat rules if your business is located in another eu country. You can join the flat rate vat scheme in your country by checking out the rules and completing the necessary vat form. You will probably need to find out the classification of your goods and services to be able to use the appropriate flat vat rate while billing your customers. You can also leave the scheme to migrate to another vat scheme by informing the appropriate vat authorities before making your move.
Although the system of vat is fairly simple to apply, you’ll still require the 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 simple and you offer 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.