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

In case your business is in an EU country which has adopted vat then you can opt for flat rate vat if you want to simplify your accounting and also be far from presenting vat figures in full detail. This scheme allows you to simply calculate a prescribed percentage of your vat inclusive sales as being the final vat figure without going into intricate sale or purchase details, as it is normally required when you file vat returns.

If you 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 fulfill the criteria set up by the tax authorities inside your country. If your business is situated in the UK then you can go for vat flat rate if your estimated sales turnover within 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 have to display the vat amount in your vat invoice, you don’t need to keep a detailed account of the vat figures on the sale or purchase when you would have to do under normal vat circumstances. You will, however not be able to go in for vat reclaim just in case you opt for the flat rate vat scheme. UK also offers a 1% discount scheme for the 1st year for firms that opt for this scheme. If you happen to offer goods or services that come under different vat rates then you will have to apply the top vat rate should you choose opt for this scheme.

Thus, if you buy or sell goods or services under reduced vat rates or have to reclaim vat which has recently been paid this scheme would not be ideal for you. However, if you mostly offer 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 your vat flat rate scheme would be ideal for you and your business. You could find added time to focus on growing your business rather than 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 review eu vat rules in case your business 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 filling out the necessary vat form. You will probably must find out the classification of your goods and services so that you can use the appropriate flat vat rate while billing your clients. You can also leave the scheme to migrate to a different vat scheme by informing the appropriate vat authorities before making your move.

Even though the system of vat is fairly simple to apply, you will still require the services of expert vat agent or consultant to assist you with vat calculations, vat returns and vat refunds. However, if your business format is kind of basic and you offer limited services or goods that come under standard vat rates then you can go for the flat rate vat scheme to simplify your accounting.