The VAT Flat Fee Plan is developed for firms with a turnover of much less than £150,000 who want to simplify their VAT accounting.
The VAT Flat Rate Scheme works as follows
You simply determine your VAT payments as a proportion of your complete, VAT-inclusive turnover. 1 draw back to the VAT Flat Fee Plan, even so, is that you can not reclaim VAT on purchases, as an regular is taken into account in calculating the flat rate percentage that you use.
You may possibly be able to claim back again the VAT on funds belongings value much more than £2,000 -please inquire if you are unsure.
The VAT Flat Price Plan can minimize how much time you need to have to invest on accounting and working out your VAT.
Even though you still need to have to present a VAT volume on every single of your revenue invoices, you do not require to file how considerably VAT you demand on every sale in your accounts, and the same applies for the VAT you pay out on your purchases.
What’s a lot more, if you are newly VAT registered, you can minimize your flat fee by 1% until the working day ahead of the first anniversary of your VAT registration.
You Cannot Be a part of The VAT Flat Price Plan If…
http://vat-calculator.uk/ were in the scheme, and left in the preceding 12 months
You are, or have been inside the prior months, either qualified to be part of an present VAT group, or registered for VAT as a division of a greater enterprise
You use a single of the margin scheme for next-hand merchandise, art, antiques and collectibles, the Tour Operators’ Margin Plan, or the Money Merchandise Scheme
You have been convicted of a VAT offence or billed a penalty for VAT evasion in the very last 12 months
Your company is closely associated with an additional company
You don’t have to document the Price Added Tax you charge on each and every sale and purchase
Initial calendar year discount if you happen to be newly Price Additional Tax registered
Much less guidelines to stick to
Significantly less likelihood of blunders
Certainty – you will usually know what percentage of your having you will have to shell out to HMRC
You can’t reclaim VAT on buys
Potentially wouldn’t be the ideal alternative for you if you already make a lot of zero-rated or exempt revenue
Probably would not be the very best selection for you if you routinely obtain a VAT repayment below standard VAT accounting
And there you have it the pro’s and con’s of the VAT Flat Charge Plan!