If you are a trader in the United Kingdom or other EU country which has adopted or vat as a way of collecting taxes then for supplying vat registered traders it seems sensible to sign up for vat. It will be possible to pass on vat benefits to your customers while also being able to reclaim vat that might have previously been paid in a foreign country.
In the United Kingdom you are able to register as being a vat registered trader regardless of whether you’re an individual running a business, a partnership, a club, a company, an association, or any other vat numbers kind of organisation. Basically, for anyone who is dealing in services or goods that attract vat then you can certainly get registered for vat. In addition, if most of your customers are vat registered dealers then it definitely makes sense for you to continue the vat tax chain and turn a vat registered dealer.
In case your taxable sales go over the vat threshold limit of ?70,000 in the last 12 months then you’re eligible for vat registration. However, you can also volunteer to obtain registered for vat before crossing the threshold limit too. Vat is an excellent way of taxing goods and services so as to prevent the problem of double taxation and even bring about transparency within the tax system. If you’re planning to import goods or services to the UK and then sell them locally you’ll be able to also make an application for vat refunds once you become an official vat registered trader. You will have to apply to the HM revenue and customs department or the hmrc department, which inturn will forward your refund application to the concerned eu country.
Once you sign up for vat with the hmrc department and turn into an official vat registered dealer then you’ll have to issue a vat invoice that’s been specified by hmrc. You will need to mention your vat number, vat rate and vat amount on the invoice. UK has 3 kinds of vat rates with the standard rates at 17.5%, reduced vat rates at 5% and zero vat rates. Some goods and services with a social impact are usually vat exempt. You’ll first have to check as to which vat rate applies to each products or services before you begin issuing vat invoices and start charging the applicable rates.
The vat rules in several eu countries that have adopted vat are slightly different and if you plan to import goods from such countries then you will want to know far more than simply what is vat. A professional vat agent with sufficient understanding of customs and excise duties that also knows information about uk vat and eu vat rules should be hired for smooth import of goods and services to the UK. As soon as you turn into a vat registered dealer then you’ll definitely also need to file vat returns at the hmrc specified periods. If you deal in vat exempted goods then you will be unable to claim any vat refunds.
The hmrc offers vat registered dealers a chance to file their vat returns online itself. Your agent can also file the return for you. However, before you become a part of the vat cycle you have to first sign up for vat in order that you can also enjoy all tax benefits provided by this tax system.