In case you have crossed the threshold limit or wish to be 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 decrease 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 whilst trading between member eu countries. In case you have started a new business in the United Kingdom and have touched ?70,000 pounds in taxable sales during the past 12 months then you can make an application for vat registration with the HM Revenue and Customs or hmrc department. You can even apply before threshold limit is achieved if you sell your goods or services 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 make an application for vat registration your costs could increase slightly, and when you sell your products or services locally in the UK at a retail level then you could opt to remain outside of vat if you only sell vat exempt goods. However, if you try to artificially make an effort to separate your enterprise activities only to remain outside the system of vat then this hmrc vat department may not take your actions lightly if you’re discovered doing precisely the same. There are several benefits of entering the vat system as it will avoid 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 quite simple however, if you aren’t 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 can make an application for vat using your vat agent too provided you inform the department of your choosing. Once you make an application for vat registration then this process of approving your 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 factor in 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 approved you will receive your distinct vat registration number and can have to display it on all vat documents including your vat invoices, vat returns, and vat refunds. You will also have to issue a vat invoice that separately shows all vat rates applied in that invoice along with your vat no at the top. You will have to give a breakdown of all vat paid and collected within your vat returns that will have to be filed periodically as needed by the hmrc vat department. If you have already paid vat on products or services in another eu country then you can certainly apply for vat reclaim once you’re 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 simply fill the online vat registration form and submit it to the hmrc vat department when you apply for registration for vat.