You can choose flat rate vat if you want to simplify your accounting

In case your company is in a 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 allows you to simply calculate a prescribed percentage 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.

For those who have a fundamental problem of being aware what is vat and foresee problems to maintain detailed vat accounts then you can opt for the vat flat rate scheme provided you meet the criteria set up by the tax authorities in your country. In case your organization is located in the UK then you can go for vat flat rate in case your estimated sales turnover in the next year excluding vat is not 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 as part of your vat invoice, you don’t need to keep an in depth account of the vat figures on the sale or purchase as you would have to do under normal vat circumstances. You will, 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 first year for businesses that opt for this scheme. If you happen to deal in goods or services that come under different vat rates then you will need to apply the highest vat rate should you choose opt 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 this scheme wouldn’t be suitable for you. However, if you mostly deal in services or goods that entail standard vat rates, do not need to go in for any vat refund, or engage in retail sale then the vat flat rate scheme would be ideal for both you and your business. You can get more time to concentrate on growing your business rather than passing 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 situated in another eu country. You can join the flat rate vat scheme in your country by checking out the rules and completing the required vat form. You will also must find the classification of your services and goods 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 relevant vat authorities before making your move.

Even though the system of vat is fairly 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 kind of basic and you offer limited services or goods that fall under standard vat rates you’ll be able to go in for the flat rate vat scheme to simplify your accounting.