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 www.vatnumbers.com Twelve months then you need to apply for vat registration so that you can also become part of this tax system that is in force in the majority of Europe.
If you are a really small trader that mostly sells retail goods then you can remain from the purview of vat or value added tax so long as your taxable sales don’t touch ?70,000 in 12 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 UK. Vat continues to be employed as a means of collecting taxes on goods and services in most of Europe and 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 have to reclaim vat that has already been paid on services and goods, specifically in a different eu country where this method is followed. You should hire the services of an experienced vat agent well conversed in uk and eu vat rules for vat registration purposes as well as for filing of vat refunds to ensure that there aren’t any problems in claiming back vat.
Once you do turn into a vat registered trader in the UK, which could extend to a month after you file a web-based vat application then you will need to charge vat according to the 14,000 goods and services classifications given by the hmrc vat department. This will have to be done through each vat invoice that 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%, as well as the zero vat rate. Certain services and goods 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 will also have to file your vat returns on a regular basis. Again, your vat agent is going to be required to calculate vat to get paid or refunded depending on your vat purchases and sales. If you have imported goods or services in the UK after paying vat in 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 8 months after your claim is successfully processed by hmrc and the member country. Overall, vat is an excellent tax system to avoid double taxation and also plug many loopholes which were found in the conventional sales tax system.
If you’re a growing trader in the United Kingdom that sells taxable goods to vat registered traders then you need to maintain the cycle of vat alive by getting to be a vat registered trader. Now you can collect and pay uk vat while also claiming any vat previously paid on imported products or services, which will will reduce your tax overheads to some large extent.