If your business is in a EU country which has adopted vat then you can opt for flat rate vat if you wish to simplify your accounting and also be away from presenting vat figures fully detail. This scheme enables 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 it is normally required whenever you file vat returns.
If you 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 meet the criteria put in place by the tax authorities in your country. In case your organization is located in Great Britain then you can certainly opt for www.vatcontrol.com vat flat rate in case your estimated sales turnover in 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.
Even though you will still have to display the vat amount as part of your vat invoice, you don’t need to keep a detailed account of your vat figures on the sale or purchase when you might need 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 first year for businesses that opt for this scheme. If you happen to offer goods or services that fall under different vat rates then you will have to apply the highest vat rate if you do opt for this scheme.
Thus, if you purchase or sell services or goods under reduced vat rates or need to reclaim vat that has recently been paid this scheme wouldn’t be ideal for you. However, if you mostly offer goods or services that entail 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 will be ideal for both you and your business. You can get more time to focus on growing your organization instead of passing time on vat calculations while filing your returns would also become simpler.
These rules pertain to businesses choosing the scheme in the United Kingdom. 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 studying the rules and completing the required 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 clients. You may also leave the scheme to migrate to another vat scheme by informing the relevant vat authorities prior to making your move.
Even though the system of vat is fairly easy to implement, you’ll 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 basic and you offer limited goods or services that come under standard vat rates then you can go in for the flat rate vat scheme to simplify your accounting.