You can opt for flat rate vat in order to simplify your accounting

In case your business 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 also be away from presenting vat figures in full detail. This scheme allows 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 is normally required whenever you file vat returns.

For those who have a fundamental problem of understanding what is vat and foresee problems in maintaining detailed vat accounts then you can choose the vat flat rate scheme provided you meetthe factors set up by the tax authorities in your country. In case your organization is situated in the UK then you can opt for vat flat rate if your estimated sales turnover within the next year excluding vat isn’t over £150,000 or including vat is not over £187,500. It is possible to remain under this scheme until your turnover vatnumbersearch 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 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 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 businesses that choose this scheme. If you happen to offer services or goods that come under different vat rates then you will need to apply the highest 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 then this scheme wouldn’t be suitable for you. However, should you mostly offer services or goods that entail standard vat rates, don’t need to have any vat refund, or engage in retail sale then the vat flat rate scheme would be ideal for you and your business. You could find added time to concentrate 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 UK. You will have to check on eu vat rules if your organization is located in another eu country. It is possible to join the flat rate vat scheme within your country by checking out the rules and completing the necessary vat form. You will probably must find the classification of the services and goods so that you can 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 before making your move.

Although the system of vat is fairly easy to implement, 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 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.