If your company is in a EU country that has adopted vat then you can opt for flat rate vat if you want 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 when 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 choose the vat flat rate scheme provided you fulfillthe factors put in place by the tax authorities in your country. If your organization is situated in Great Britain then you can certainly opt for vat flat rate if your estimated sales turnover in the next year excluding vat isn’t over £150,000 or including vat isn’t over £187,500. It is possible to remain under this scheme until your turnover www.vatnumbersearch.com touches £225,000.
Although you will still need to display the vat amount in your vat invoice, you need not keep an in depth account of the vat figures on your sale or purchase when you might need to do under normal vat circumstances. You’ll, however be unable to go for vat reclaim just in case you choose the flat rate vat scheme. UK offers a 1% discount scheme for the first year for businesses that choose this scheme. In case you offer services or goods that fall under different vat rates then you’ll need to apply the highest vat rate if you do opt for this scheme.
Thus, if you buy or sell services or goods under reduced vat rates or need to reclaim vat that has already been paid this scheme wouldn’t be ideal for you. However, if you mostly offer services or goods that entail standard vat rates, don’t need to have any vat refund, or engage in retail sale then the vat flat rate scheme would be ideal for both you and your business. You can get added time to focus 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 United Kingdom. You will need to check on eu vat rules if your organization is situated in another eu country. You can join the flat rate vat scheme within your country by studying the rules and filling out the necessary vat form. You will also need to find out the classification of the goods and services so that you can use the appropriate flat vat rate while billing your customers. 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 easy to implement, you will 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 simple and you offer limited goods or services that come under standard vat rates you’ll be able to go for the flat rate vat scheme to simplify your accounting.