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

If your company is in an EU country which has adopted vat then you can choose flat rate vat if you want to simplify your accounting and also be away from presenting vat figures fully detail. This scheme allows you to simply calculate a prescribed amount of your vat inclusive sales as the final vat figure without going into intricate sale or purchase details, as is normally required when you file vat returns.

For those who have a fundamental problem of understanding what is vat and foresee problems to maintain detailed vat accounts then you can certainly choose the vat flat rate scheme provided you fulfill the criteria set up by the tax authorities in your country. If your business is located in the UK then you can go for vat control vat flat rate in case your estimated sales turnover within the next year excluding vat is not over £150,000 or including vat is not over £187,500. You can remain under this scheme until your turnover touches £225,000.

Although you will still need to display the vat amount in your vat invoice, you don’t need to keep a detailed account of your vat figures on the sale or purchase as you might need to do under normal vat circumstances. You’ll, however not be able to go in for vat reclaim 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 fall under different vat rates then you will need to apply the top vat rate should you choose go for this scheme.

Thus, if you purchase or sell goods or services under reduced vat rates or have to reclaim vat which has recently been paid this scheme wouldn’t be ideal for you. However, should you mostly offer services or goods that involve standard vat rates, do not need to have any vat refund, or take part in retail sale then the vat flat rate scheme will be ideal for both you and your business. You could find added time to concentrate on growing your business rather than spending time on vat calculations while filing your returns would also become simpler.

These rules pertain to businesses choosing the scheme in the UK. You will have to check on eu vat rules if your organization is located in another eu country. It is possible to join the flat rate vat scheme in your country by studying 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 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 appropriate vat authorities prior to making your move.

Even though the system of vat is fairly simple to apply, 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 fairly simple and you deal in limited services or goods that come under standard vat rates you’ll be able to go in for the flat rate vat scheme to simplify your accounting.