It is possible to choose flat rate vat if you want to simplify your accounting

If your company is in an EU country that has adopted vat then you can choose flat rate vat if you want to simplify your accounting and also be away 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.

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 meet the criteria put in place by the tax authorities in your country. If your organization is located in Great Britain then you can go for vat flat rate in case 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 touches £225,000.

Even though you will still need to display the vat amount in your vat invoice, you don’t need to keep a detailed account of the vat figures on your sale or purchase when you might need to do under normal vat circumstances. You’ll, however be unable to go in for vat reclaim in case you opt for the flat rate vat scheme. UK also offers a 1% discount scheme for the 1st year for businesses that choose this scheme. In case you deal in goods or services that fall under different vat rates then you’ll need to apply the highest vat rate should you choose go for this scheme.

Thus, if you buy or sell services or goods under reduced vat rates or have to reclaim vat that has already been paid then this scheme would not be suitable for you. However, should you mostly deal in goods or services that entail standard vat rates, don’t need to go in for any vat refund, or take part in retail sale then the vat flat rate scheme would be ideal for you and your business. You could find more time to focus on growing your organization instead of passing 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. You can join the flat rate vat scheme within your country by checking out the rules and completing the necessary vat form. You will also must find out the classification of your services and goods so that you can use the appropriate flat vat rate while billing your customers. You can also leave the scheme to migrate to a different vat scheme by informing the appropriate vat authorities prior to making your move.

Even though the system of vat is fairly simple to apply, you’ll still require the 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 kind of simple and you deal in limited goods or services that fall under standard vat rates then you can go for the flat rate vat scheme to simplify your accounting.