What You Need to Know About the VAT Flat Rate Schemeby Vidit Agarwal Marketing Director
The calculation of the amount payable by the business in the form of VAT takes into consideration all the inbound transactions to the business. Also as these transactions often vary in numbers, the taxation amount is subject to change every quarter, after the calculation of the trade during that period. Flat Rate Scheme is a scheme launched by the government which asks the traders to pay a definite amount of money as tax in the quarter.
This scheme aims at reducing the paperwork as well as the hectic workout of the VAT amount calculations on both ends; businesses and government. This scheme can be availed by the businesses who have a turnover less than 1,50,000 Euros. Those registering under this scheme are liable to get tax benefits in the form of reduced rates of taxation. It also aims at providing respite from the length procedures of calculating and filing the VAT.
This scheme has been applauded, especially by the small and medium sized businesses. It allows these growing firms to be at ease with the taxation burden. The government also takes an interest in propagating this scheme as it allows them to have a lesser burden on their financial and tax collection systems. It is also favorable in the sense as the small businesses which were previously looking out for measures to evade the taxes have started to register in this scheme in light of the legalization of trade along with lesser taxes.
Several issues have also been reported for VAT Flat Rate Scheme. These include the flawed registration of some companies to enjoy the tax rebates. This in a way beats the main purpose of the scheme, which aims at allowing the smaller players to grow without excessive taxation load. The authorities are thus keen at implementing measures to eradicate the flaws. Several new measures have been implemented starting from 1 April’ 17, aimed at reducing the fraudulent practices based on this scheme.
The rates of taxation are the incentive for the Flat Rate Scheme registered businesses. They can simply use the VAT Flat Rate Scheme Calculator approved by HMRC to find out the amount that would be required to be paid during a quarter. This has made the task increasingly easier for the businesses as they are now no more required to waste valuable man hours in calculation and filing of the taxes.
It has been observed that the honesty about tax payment is generated amongst the citizens if they feel that are being taxed justifiably. VAT is a tax that can’t be done without as it forms a major part of the government earning. Therefore, it is logical to bring in practices that have the ability to offer incentives to the honest traders and citizens in the form tax rebates. VAT Flat Rate Scheme is one such clever measure, which manages to bring more businesses into the taxation fold through offering them better rates of taxation and other worthy benefits. The change in the policies regarding this is also required to be devised in a way that they remain true to the main idea behind this scheme.If you need any further help of support in making the decision about VAT flat rate, you can get in touch with Accountants in Morecambe or Accountants in Carnforth.
Created on Jan 15th 2019 07:39. Viewed 124 times.