If your company 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 Vatcheck.com. This scheme enables you to simply calculate a prescribed amount 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 fundamental 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 set up by the tax authorities inside 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 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 for vat reclaim in case you choose the flat rate vat scheme. UK also offers a 1% discount scheme for the 1st year for firms that choose this scheme. If you happen to offer services or goods that come under different vat rates then you will have to apply the top vat rate if you do go for this scheme.
Thus, if you purchase or sell goods or services under reduced vat rates or have to reclaim vat which has recently been paid this scheme would not be ideal for you. However, if you mostly offer services or goods that involve 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 will be ideal for you and your business. You can get added time to concentrate 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 UK. You will have to check on eu vat rules in case your business is situated 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 also must find the classification of your goods and services to be able to 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.
Although the system of vat is rather simple to apply, you’ll still require the services of an expert vat agent or consultant to help you with vat calculations, vat returns and vat refunds. However, if your business format is fairly basic 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.