If your business is in an EU country which has adopted vat then you can choose flat rate vat if you wish to simplify your accounting and stay away from presenting vat figures fully detail. This scheme enables you to simply calculate a prescribed amount of your vat inclusive sales as being 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 certainly choose the vat flat rate scheme provided you fulfillthe factors set up by the tax authorities in your country. In case your organization is located in Great Britain then you can go for vat flat rate if your estimated sales turnover within the next year excluding vat is not over £150,000 or including vat isn’t over £187,500. You can remain under this scheme until your turnover www.vatnumbersearch.com touches £225,000.
Even though you will still have to display the vat amount as part of your vat invoice, you don’t need to keep an in depth account of your vat figures on the sale or purchase as you might need to do under normal vat circumstances. You will, however not be able to go in for vat reclaim in case you choose the flat rate vat scheme. UK offers a 1% discount scheme for the first year for businesses that opt for this scheme. If you happen to deal in services or goods that fall under different vat rates then you will need to apply the highest vat rate should you choose go for this scheme.
Thus, if you buy or sell services or goods under reduced vat rates or have to reclaim vat that has recently been paid this scheme wouldn’t be suitable for you. However, if you mostly deal in goods or services that involve standard vat rates, do not need to go in for any vat refund, or take part in retail sale then the vat flat rate scheme would be perfect for you and your business. You could find more time to focus on growing your business instead of spending time on vat calculations while filing your returns would also become simpler.
These rules apply to businesses choosing the scheme in the UK. You will have to check on eu vat rules in case your organization is located in another eu country. It is possible to join the flat rate vat scheme in your country by studying the rules and completing the required vat form. You will also need to find the classification of the 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 prior to 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 help you with vat calculations, vat returns and vat refunds. However, if your business format is kind of simple and you deal in limited services or goods that fall under standard vat rates then you can go for the flat rate vat scheme to simplify your accounting.