If you’re a trader in the UK with rising taxable sales you will need to pay uk vat to relish all benefits provided by this taxation system. As soon as your taxable sales touch the vat threshold limit of ?70,000 during the past vatnumbers 12 months then you need to apply for vat registration in order that you too can become part of this tax system that’s in effect in the majority of European countries.
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, if your sales touch that figure or if you sell goods to vat registered traders then you would be better off being a vat registered trader in the United Kingdom. Vat continues to be employed as a way of collecting taxes on goods and services in most of Europe as well as the UK too follows this system. The vat department in the United Kingdom is headed by HM Revenue and Customs or hmrc department.
After you have crossed over the vat threshold limit for uk then you’ll have to apply for vat registration. You can do so before you reach this limit if you think that you need to reclaim vat which has already been paid on services and goods, especially in a different eu country where this method is followed. You ought to do the hiring 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.
Once you do turn into a vat registered trader in the United Kingdom, which could extend to 30 days once you file a web-based vat application then you’ll have to charge vat according to the 14,000 goods and services classifications provided by the hmrc vat department. This will likely need to be carried out by each vat invoice you will be needed to issue during each taxable sale. UK has 3 vat rates starting with the standard 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 so as to pay and collect uk vat based on vat invoices then you’ll also have to file your vat returns on a regular basis. Again, your vat agent will be required to calculate vat to get paid or refunded depending on your vat purchases and sales. If you have imported services or goods in the United Kingdom after paying vat in a eu country then you can avoid double taxation by filing a vat reclaim form. You will be awarded vat refund between four to eight months after your claim is successfully processed by hmrc as well as the member country. Overall, vat is an excellent tax system to prevent double taxation and also plug many loopholes which were present in the conventional sales tax system.
If you’re a growing trader in the UK that sells taxable goods to vat registered traders then you will want to maintain the cycle of vat alive by turning into a vat registered trader. Now you can collect and pay uk vat whilst claiming any vat previously paid on imported goods and services, which in turn will reduce your tax overheads to some large extent.