The VAT Flat Fee Scheme is created for businesses with a turnover of considerably less than £150,000 who want to simplify their VAT accounting.
The VAT Flat Fee Scheme operates as follows
You just estimate your VAT payments as a proportion of your whole, VAT-inclusive turnover. 1 downside to the VAT Flat Rate Plan, nevertheless, is that you can not reclaim VAT on purchases, as an average is taken into account in calculating the flat price share that you use.
You may possibly be ready to assert again the VAT on capital belongings well worth more than £2,000 -please ask if you are uncertain.
The VAT Flat Fee Scheme can lessen how significantly time you need to spend on accounting and doing work out your VAT.
Although you even now require to demonstrate a VAT quantity on each and every of your product sales invoices, you do not require to file how much VAT you charge on every sale in your accounts, and the same applies for the VAT you pay out on your purchases.
What is more, if you are freshly VAT registered, you can lessen your flat charge by 1% till the day prior to the 1st anniversary of your VAT registration.
You Can’t Be part of The VAT Flat Price Plan If…
VAT registration in OMAN were in the plan, and still left in the preceding 12 months
You are, or have been in the prior months, possibly suitable to be part of an existing VAT team, or registered for VAT as a division of a larger company
You use 1 of the margin scheme for 2nd-hand goods, artwork, antiques and collectibles, the Tour Operators’ Margin Scheme, or the Money Items Scheme
You have been convicted of a VAT offence or billed a penalty for VAT evasion in the very last yr
Your enterprise is carefully related with an additional organization
You will not have to report the Benefit Added Tax you demand on every single sale and acquire
Initial calendar year discount if you happen to be freshly Value Additional Tax registered
Less rules to comply with
Less likelihood of mistakes
Certainty – you will always know what proportion of your using you will have to spend to HMRC
You can not reclaim VAT on purchases
Probably would not be the best alternative for you if you presently make a whole lot of zero-rated or exempt income
Probably would not be the very best choice for you if you regularly get a VAT compensation under normal VAT accounting
And there you have it the pro’s and con’s of the VAT Flat Rate Scheme!