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

In case your business is in a EU country that has adopted vat you’ll be able to choose flat rate vat if you wish to simplify your accounting and stay away 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 is normally required whenever you file vat returns.

If you have a fundamental 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 fulfill the criteria vat verification put in place by the tax authorities in your country. If your organization is located in Great Britain then you can certainly opt for vat flat rate if your estimated sales turnover in 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.

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 the sale or purchase as you might need to do under normal vat circumstances. You will, however not be able to go 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. In case you offer services or goods that fall under different vat rates then you’ll have to apply the top vat rate if you do go for this scheme.

Thus, if you buy or sell goods or services under reduced vat rates or need to reclaim vat which has already 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 have any vat refund, or take part in retail sale then the vat flat rate scheme would be ideal for you and your business. You can get added time to focus on growing your organization instead of spending time on vat calculations while filing your returns would also become simpler.

These rules pertain to businesses opting for the scheme in the United Kingdom. You will need to check on eu vat rules if your organization is situated in another eu country. It is possible to join the flat rate vat scheme in your country by checking out the rules and completing the required vat form. You will also need to find the classification of the goods and services to be able to make use of the appropriate flat vat rate while billing your customers. You may also leave the scheme to migrate to another vat scheme by informing the relevant vat authorities before making your move.

Although the system of vat is rather easy to implement, you’ll still require services of an expert vat agent or consultant to assist you with vat calculations, vat returns and vat refunds. However, in case your business format is fairly simple and you deal in limited goods or services that come under standard vat rates then you can go in for the flat rate vat scheme to simplify your accounting.