If your business is in an EU country which has adopted vat then you can opt for flat rate vat if you want to simplify your accounting and stay far from presenting vat figures in full detail http://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.
If you have a basic problem of understanding what is vat and foresee problems in maintaining detailed vat accounts then you can certainly choose the vat flat rate scheme provided you fulfill the criteria set up by the tax authorities inside your country. If your organization is located in Great Britain then you can opt for vat flat rate in case your estimated sales turnover within the next year excluding vat isn’t 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 a detailed account of the vat figures on the sale or purchase as you would have to do under normal vat circumstances. You’ll, however be unable to go in for vat reclaim just in case you choose the flat rate vat scheme. UK also offers a 1% discount scheme for the 1st year for firms that opt for this scheme. If you happen to offer goods or services that come under different vat rates then you’ll have to apply the top vat rate should you choose go for this scheme.
Thus, if you buy or sell services or goods under reduced vat rates or need to reclaim vat which has recently been paid then this scheme would not be suitable for you. However, should you mostly offer goods or services that entail standard vat rates, do not need to have any vat refund, or engage in retail sale then the vat flat rate scheme will be ideal for you and your business. You could find more time to concentrate on growing your organization instead of spending time on vat calculations while filing your returns would also become simpler.
These rules pertain to businesses opting for the scheme in the United Kingdom. You will have to review eu vat rules in case your business is located in another eu country. You can join the flat rate vat scheme in your country by checking out the rules and filling out the necessary vat form. You will also must find the classification of your services and goods so that you can make use of 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 before making your move.
Although the system of vat is rather easy to implement, you’ll still require services of expert vat agent or consultant to assist you with vat calculations, vat returns and vat refunds. However, in case your business format is fairly basic and you offer limited services or goods that fall under standard vat rates you’ll be able to go for the flat rate vat scheme to simplify your accounting.