If you have crossed the threshold limit or want to be a part of the vat or value added tax system then you will need to make an application for registration for vat to turn into a vat registered trader. Once you turn into a vat registered trader then you will be empowered to reclaim vat paid in another eu country and thereby lower your costs as well as enhance your business earnings.
Several eu countries like the UK, Spain, Poland, Sweden, Italy, Germany, etc have moved over to vat for taxing goods and services. Vat is thus followed whilst trading between member eu countries. If you have started a fresh business in the United Kingdom and have touched ?70,000 pounds in taxable sales in the past 1 year then you can definitely apply for vat registration with the HM Revenue and Customs or hmrc department. You may also apply before this threshold limit is achieved if you sell your services or goods to mostly vat registered traders. Vat registration can be achieved as an individual, partnership, company, trust, etc as deemed fit by the hmrc department.
However, as soon as you apply for vat registration your costs could increase slightly, and when you sell your products or services locally in the United Kingdom at a retail level then you could choose to remain outside of vat if you only sell vat exempt goods. However, if you try to artificially make an effort to separate your business activities simply to remain outside the system of vat then the hmrc vat department might not take your actions lightly in case you are discovered doing precisely the same. There are many advantages of entering the vat system since it will prevents the problem of double taxation by allowing you to definitely reclaim vat already paid on goods or services in another country too.
The whole process for registration for vat is pretty simple however, if you are not sure about yourself then you should simply appoint an expert vat agent to handle all vat matters. The hmrc vat department offers several vat online services including applications for registration for vat. You are able to apply for vat through your vat agent too provided you inform the department of your choosing. Once you apply for vat registration then this procedure for approving the application typically takes between 10 to 30 days. Until then you can keep issuing regular invoices to your clients. However, during that period you will have to take into account applicable vat rates and re-issue those invoices issued after the application so that your clients can reclaim vat from other end.
Once your application is eligible you will receive your unique vat registration number and can have to display it on all vat documents including your vat invoices, vat returns, and vat refunds. You will probably need to issue a vat invoice that separately shows all vat rates applied in the invoice along with your vat no at the very top. You will have to provide a breakdown of all vat paid and collected in your vat returns which will have to be filed periodically as required by the hmrc vat department. In case you have already paid vat on products or services in another eu country then you can certainly apply for vat reclaim once you are an official vat registered trader.
Vat registration is a straightforward online process that has to be done first if you wish to turn into a vat registered trader in the United Kingdom. You can simply fill the online vat registration form and submit it to the hmrc vat department when you make an application for registration for vat.