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It is possible to opt for flat rate vat in order to simplify your accounting


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If 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 in full 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 to maintain detailed vat accounts then you can certainly opt for the vat flat rate scheme provided you meet the criteria set up by the tax authorities inside your country. In case your business is located in Great Britain then you can opt for vat flat rate in case your estimated sales turnover in 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 vat number search touches £225,000.

Even though 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 your sale or purchase as you might need to do under normal vat circumstances. You will, however be unable to go in 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 choose this scheme. If you happen to deal in services or goods that fall 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 goods or services under reduced vat rates or have to reclaim vat that has already been paid this scheme wouldn’t be ideal for you. However, if you mostly offer goods or services that involve standard vat rates, don’t need to have any vat refund, or engage in retail sale then your vat flat rate scheme would be ideal 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 business is situated 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 required vat form. You will probably must find out the classification of your goods and services to be able to 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 prior to making your move.

Even though the system of vat is rather easy to implement, you’ll still require the services of an expert vat agent or consultant to help you with vat calculations, vat returns and vat refunds. However, in case your business format is fairly simple and you offer 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.