If you are a trader in the United Kingdom with rising taxable sales then you 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 in the past Twelve months then you need to apply for vat registration in order that you too can become part of this tax system that is in force in most Europe.
If you’re a very 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 do not touch ?70,000 in Twelve months. However, if your sales touch that figure or let’s say you sell goods to vat registered traders then you would be better off as a vat registered trader in the United Kingdom. Vat continues to be employed as a means 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 UK is headed by HM Revenue and Customs or hmrc department.
Once you have crossed over the vat threshold limit for uk http://vatcontrol.com then you’ll need to make an application for vat registration. You can do so even before you reach this limit if you think that you need to reclaim vat that has previously been paid on goods and services, especially in a foreign 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 to ensure that there are no problems in claiming back vat.
As soon as you do turn into a vat registered trader in the UK, which may take up to 30 days once you file a web-based vat application then you will have to charge vat as per the 14,000 services and goods classifications provided by the hmrc vat department. This will likely have to be done through each vat invoice that you will be needed to issue during each taxable sale. UK has 3 vat rates beginning with the regular rate of 17.5%, reduced vat rate of 5%, and the zero vat rate. Certain services and goods are totally vat exempt too.
Once you are a vat registered trader so as to pay and collect uk vat based on vat invoices then you’ll also need to file your vat returns regularly. Again, your vat agent is going to be necessary to calculate vat to get paid or refunded depending on your vat purchases and sales. In case you have imported goods or services in the United Kingdom after paying vat within a eu country then you can definitely avoid double taxation by filing a vat reclaim form. You’ll 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 as well as plug many loopholes that were found 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 need 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 products or services, which in turn will lower tax overheads to a large extent.