If your company is in an EU country that has adopted vat you’ll be able to choose flat rate vat if you wish to simplify your accounting and stay far from presenting vat figures fully detail. This scheme allows 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 whenever you file vat returns search vat number.
If you have a basic problem of understanding what is vat and foresee problems in maintaining detailed vat accounts then you can opt for the vat flat rate scheme provided you meetthe factors set up by the tax authorities inside your country. In case your business is located 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.
Although you will still have to display the vat amount in your vat invoice, you need not keep a detailed account of your vat figures on the sale or purchase when you would have to do under normal vat circumstances. You’ll, however be unable to go for vat reclaim in case you choose the flat rate vat scheme. UK offers a 1% discount scheme for the 1st year for firms that opt for this scheme. In case you deal in goods or services that fall under different vat rates then you will need to apply the top vat rate if you do opt for this scheme.
Thus, if you buy or sell services or goods under reduced vat rates or have to reclaim vat which has already 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 have any vat refund, or take part in retail sale then your vat flat rate scheme will be ideal for you and your business. You could find more 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 choosing the scheme in the UK. You will have to check on eu vat rules if your business 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 filling out the required vat form. You will also must find the classification of the services and goods so that you can make use of the appropriate flat vat rate while billing your customers. You can also leave the scheme to migrate to another vat scheme by informing the appropriate vat authorities prior to making your move click for source .
Although the system of vat is rather simple to apply, you will 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 fairly basic and you deal in limited services or goods that come under standard vat rates then you can go in for the flat rate vat scheme to simplify your accounting.