If you are a trader in the United Kingdom with rising taxable sales you will need to pay uk vat to relish all benefits offered by this taxation system. As soon as your taxable sales touch the vat threshold limit of ?70,000 during the past Twelve months then you’ll need to get vat registration in order that you too can end up part of this tax system that is in effect in the majority of Europe.
If you’re a really small trader that mostly sells retail goods then you can remain from the purview of vat or value added tax as long as your taxable sales don’t touch ?70,000 in Twelve months. However, in case your sales touch that figure or let’s say you sell goods to vat registered traders you would be better off being a vat registered trader in the UK. Vat continues to be employed as a way of collecting taxes on products or services in most of Europe as well as the UK too follows this method. The vat department in the UK is headed by HM Revenue and Customs or hmrc department.
Once you have crossed over the vat threshold limit for uk vatcontrol.com then you’ll have to make an application for vat registration. That can be done before you reach this limit if you think that you need to reclaim vat that has previously been paid on services and goods, especially in a foreign eu country where this method is followed. You should hire the services of experienced vat agent well conversed in uk and eu vat rules for vat registration purposes and for filing of vat refunds so that there aren’t any problems in claiming back vat.
As soon as you do turn into a vat registered trader in the UK, which could take up to 30 days once you file a web-based vat application then you will have to charge vat according to the 14,000 goods and services classifications given by the hmrc vat department. This will need to be done through each vat invoice you will be required to issue during each taxable sale. UK has 3 vat rates starting with the regular rate of 17.5%, reduced vat rate of 5%, and the zero vat rate. Certain goods and services are totally vat exempt too.
As soon as you turn into a vat registered trader in order to pay and collect uk vat based on vat invoices then you will also have to file your vat returns regularly. Again, your vat agent will be required to calculate vat to get paid or refunded depending on your vat purchases and sales. In case you have imported goods or services in the UK after paying vat within a eu country then you can definitely avoid double taxation by filing a vat reclaim form. You’ll be awarded vat refund between four to 8 months after your claim is successfully processed by hmrc and the member country. Overall, vat is a good tax system to prevent double taxation and also plug many loopholes which were found in the conventional sales tax system.
If you are a growing trader in the United Kingdom that sells taxable goods to vat registered traders then you will want to keep the cycle of vat alive by getting to be a vat registered trader. You can now collect and pay uk vat whilst claiming any vat previously paid on imported goods and services, which will will reduce your tax overheads to a large extent.