In case your business is in a EU country which has adopted vat you'll be able to opt for flat rate vat if you wish to simplify your accounting and also be far 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.
For those who have a fundamental 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 meetthe factors vat verification set up by the tax authorities in your country. In case your business is situated in Great Britain then you can opt for vat flat rate in case 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 touches £225,000.
Although you will still need to display the vat amount as part of your vat invoice, you need not keep an in depth account of the vat figures on your sale or purchase as you would have to do under normal vat circumstances. You'll, however not be able to go in for vat reclaim in case you choose the flat rate vat scheme. UK also 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 fall under different vat rates then you will need to apply the highest 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 that has already been paid then this scheme would not be ideal for you. However, should you mostly deal in goods or services that involve standard vat rates, do not need to have 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 concentrate on growing your business instead of spending 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 check on eu vat rules if your organization is situated in another eu country. It is possible to join the flat rate vat scheme in your country by checking out the rules and completing the required vat form. You will probably must find out the classification of the services and goods 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 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 expert vat agent or consultant to help you with vat calculations, vat returns and vat refunds. However, if your business format is kind of basic and you deal in 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.
