In case you have crossed the threshold limit or wish to become a part of the vat or value added tax system then you’ll need to make an application for registration for vat to turn into a vat registered trader. When you finally are a vat registered trader you will then be empowered to reclaim vat paid in another eu country and thereby lower your costs and also enhance your business cash flow.
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 even while trading between member eu countries. In case you have started a new business in the UK and also have touched ?70,000 pounds in taxable sales in the past 1 year then you can make an application 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 done 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 if you sell your goods and services locally in the United Kingdom at the retail level then you could choose to remain outside of vat should 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 if you’re discovered doing the same. There are several benefits of entering the vat system since it will prevents the problem of double taxation by permitting you to reclaim vat already paid on goods or services in another country too.
The entire process for registration for vat is quite simple but if you are not sure about yourself then you should simply appoint a professional vat agent to deal with 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 make an application for vat registration then this procedure for approving the application usually takes between 10 to 30 days. Fo the time being you can continue issuing regular invoices to your clients. However, during that period you will need to take into account applicable vat rates and re-issue those invoices issued after your application so your clients can reclaim vat from other end.
As soon as your application is eligible then you will receive your unique vat registration number and can need to display it on all vat documents as well as your vat invoices, vat returns, and vat refunds. You will also need to issue a vat invoice that separately shows all vat rates applied in that invoice together with your vat no at the top. You will have to give a summary of all vat paid and collected within your vat returns which will need to be filed periodically as required by the hmrc vat department. If you have already paid vat on goods and 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 simple online procedure that has to be done first if you want to turn into a vat registered trader in the UK. You can easily fill up the web based vat registration form and submit it to the hmrc vat department whenever you make an application for registration for vat.