If you are a trader in the UK with rising taxable sales you will need to pay uk vat to enjoy all benefits offered 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’ll need to get vat registration so that you too can end up part of this tax system that is in force in most European countries.
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 12 months. However, in case your sales touch that figure or if 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 way of collecting taxes on products or services in the majority of of Europe and the UK too follows this method. The vat department in the United Kingdom is headed by HM Revenue and Customs or hmrc department.
Once you have crossed over the vat threshold limit for uk then you will have to make an application for vat registration. That can be done even before you reach this limit if you think that you have to reclaim vat which 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 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.
Once you do turn into a vat registered trader in the United Kingdom, which could extend to a month once you file an online vat application then you’ll need to charge vat according to the 14,000 services and goods classifications provided by the hmrc vat department. This will need to be carried out by each vat invoice you will be required to issue during each taxable sale. UK has 3 vat rates starting with the regular 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 are a vat registered trader so as to pay and collect uk vat determined by vat invoices then you’ll also need to file your vat returns regularly. Again, your vat agent will be necessary to calculate vat to get paid or refunded based on your vat purchases and sales. If you have imported services or goods in the UK 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 8 months after your claim is successfully processed by hmrc and the member country. Overall, vat is a good tax system to prevent double taxation and also plug many loopholes that were found in the traditional sales tax system.
If you’re a growing trader in the UK that sells taxable goods to vat registered traders then you will want to keep the cycle of vat alive by turning into a vat registered trader. You can now collect and pay uk vat whilst claiming any vat previously paid on imported goods and services, which will will lower tax overheads to some large extent.