20-Jan-2011 11:15

Ever had that tense feeling?

Ever had that tense feeling?

Do you ever get nervous when you receive that quarterly prompt to calculate your VAT return?

Well, you may be unaware that if your VAT taxable turnover is less than £150,000 you can put away that bottle of aspirins because you could simplify your VAT accounting by calculating your VAT payments as a percentage of your total VAT-inclusive turnover.

Flat Rate VAT Scheme

According to HMRC many smaller businesses are now considering the merits of paying flat rate VAT.

This could means less time working out how much VAT you owe and more time running your business!

You still need to put a VAT amount on your invoices but the secret is you don’t need to record how much VAT you charged on every sale or how much you paid on every purchase.

Although you cannot reclaim VAT on purchases, they are taken into account when calculating the flat rate percentage.

This should make your life much easier – and your accountancy charges may drop considerably too.

The amount you’ll pay will depend on what kind of business you run, but HMRC make it pretty easy to find out what you would pay by providing a helpful VAT calculator on their site.
See details at: http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm#5

In addition, if you register for the Flat Rate Scheme in your first year of VAT registration, you can take advantage of a 1% reduction in your VAT flat rate percentage.

This may be a nifty scheme well worth a shout...