If you have a running business in the UK or intend to start one then you should know everything about the increase in hmrc vat rates from the coming year. This will help you to quickly incorporate all of the necessary changes in your vat invoices and vat returns, and enable you to keep on running your enterprise without interruptions.
Much like other European countries, the United Kingdom too has embraced vat or value added tax as a system for avoiding double taxation on goods and reducing tax leaks. If your current taxable sales exceed £70,000 pounds in the past 12 months then you can apply for vat registration and turn a vat registered dealer. This move will enable you to receive a vat number that will have to be mentioned in each vat invoice that you issue to the customers. This vat invoice will also have to mention the vat rate charged as well as your vat returns too will have to mention all applicable vat rates and amounts in greater detail.
Currently, the UK has 3 vat rates as decided by the hm revenue and customs department or hmrc. The regular vat rate is 17.5% that is slated to raise to 20% from January 4, 2011. You will thus have to issue tax invoices using the new standard rates from January 4, 2011 onwards and also file your vat return based on the new vat rates. The lower vat rate of 5% is slated to remain similar to well as the zero vat rate. Vat exempt rates and classifications too are slated to remain vatverification the same. To be secure and safe, you should however, ask your vat agent or consultant to stay glued to all alterations in uk vat as well as eu vat rules, especially if you import goods or services from member EU countries that follow vat.
Come January 4, 2011 and the vat threshold limit, and also the flat rate vat scheme limit too might be changed to incorporate the change in standard vat rates. However, in case you have already paid vat on products or services in another country before these were imported to the UK then you will still be able to request vat reclaim by filling out the requisite vat form. In case of any doubts you could go to the hmrc vat website while also utilizing various vat online services offered by the department. Several other eu countries too have either raised or intend to raise vat rates in the future as many countries had offered special rates to tide over the economic slowdown.
It’s thus important that you clearly comprehend the implications of increased vat rates on your own business before, during and following the change in vat rates. This should help you to file for your vat returns correctly while also charging revised vat rates to your customers. You may anyway also disclose any errors that may have already been committed through the transition period to the hmrc department and even make necessary adjustments in your next vat return as specified by them.
The rise in standard vat rates from 17.5% to 20% from January 4, 2011 will lead to a marginal increase in costs. However, this variation will also have to be reflected in coming vat returns and calculations. You need to make it a point to know everything about the increase in hmrc vat rates in the coming year so your business has a seamless transition to the New Year.