The VAT Flat Charge Plan is made for organizations with a turnover of significantly less than £150,000 who want to simplify their VAT accounting.
The VAT Flat Charge Scheme operates as follows
You merely determine your VAT payments as a share of your overall, VAT-inclusive turnover. 1 downside to the VAT Flat Rate Plan, nonetheless, is that you can not reclaim VAT on purchases, as an average is taken into account in calculating the flat charge proportion that you use.
You might be in a position to declare again the VAT on money assets worth more than £2,000 -remember to ask if you are uncertain.
http://vat-calculator.uk/ can reduce how much time you need to commit on accounting and operating out your VAT.
Although you nevertheless want to display a VAT sum on each of your income invoices, you do not need to document how a lot VAT you cost on every single sale in your accounts, and the same applies for the VAT you spend on your purchases.
What’s much more, if you are newly VAT registered, you can reduce your flat price by 1% right up until the working day prior to the very first anniversary of your VAT registration.
You Are unable to Be part of The VAT Flat Rate Scheme If…
You ended up in the plan, and remaining in the prior twelve months
You are, or have been in the earlier months, both qualified to be part of an present VAT group, or registered for VAT as a division of a more substantial business
You use 1 of the margin plan for second-hand items, art, antiques and collectibles, the Tour Operators’ Margin Scheme, or the Money Merchandise Scheme
You have been convicted of a VAT offence or charged a penalty for VAT evasion in the very last calendar year
Your organization is intently related with an additional company
You do not have to file the Price Extra Tax you demand on every sale and buy
First calendar year low cost if you might be recently Price Added Tax registered
Fewer principles to follow
Much less possibility of problems
Certainty – you will usually know what percentage of your having you will have to shell out to HMRC
You are unable to reclaim VAT on buys
Potentially would not be the very best choice for you if you already make a great deal of zero-rated or exempt product sales
Potentially would not be the ideal alternative for you if you routinely acquire a VAT repayment below standard VAT accounting
And there you have it the pro’s and con’s of the VAT Flat Fee Plan!