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

If your business is in an EU country that has adopted vat then you can choose flat rate vat if you wish to simplify your accounting and stay away from presenting vat figures in full detail This scheme enables 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 whenever you file vat returns.

If you have a basic problem of being aware 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 situated 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 isn’t over £187,500. You can 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 don’t need to keep a detailed account of the vat figures on your sale or purchase as you might need to do under normal vat circumstances. You’ll, however be unable to go for vat reclaim in case you choose the flat rate vat scheme. UK offers a 1% discount scheme for the 1st year for businesses that choose this scheme. In case you deal in services or goods that fall under different vat rates then you will need to apply the highest vat rate should you choose go for this scheme.

Thus, if you purchase or sell goods or services under reduced vat rates or need to reclaim vat that has already been paid then this scheme wouldn’t be ideal for you. However, if you mostly offer services or goods that involve standard vat rates, do not need to have any vat refund, or engage in retail sale then the vat flat rate scheme would be perfect for you and your business. You can get added time to concentrate 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 United Kingdom. You will have to check on eu vat rules if 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 necessary vat form. You will probably must find out the classification of the goods and services to be able to use the appropriate flat vat rate while billing your customers. You can 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 will 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 come under standard vat rates then you can go in for the flat rate vat scheme to simplify your accounting.