In case your company is in an EU country which 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 Http://www.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 when 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 meet the criteria put in place by the tax authorities in your country. In case your organization is located in the UK 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 in your vat invoice, you need not keep a detailed account of the vat figures on your sale or purchase as you might need to do under normal vat circumstances. You’ll, however not be able 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 services or goods that come under different vat rates then you will need 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 wouldn’t be suitable for you. However, should you mostly deal in services or goods that entail standard vat rates, don’t need to have any vat refund, or engage in retail sale then your vat flat rate scheme will be perfect for both you and your business. You can get more time to focus on growing your business rather than spending time on vat calculations while filing your returns would also become simpler.
These rules apply to businesses choosing the scheme in the United Kingdom. You will need to review eu vat rules in case your organization is located in another eu country. You can join the flat rate vat scheme within your country by studying the rules and filling out the necessary vat form. You will also need to find out the classification of your goods and services so that you can use 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.
Although the system of vat is fairly easy to implement, you will 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 goods or services that come under standard vat rates you’ll be able to go in for the flat rate vat scheme to simplify your accounting.