If you’re a trader in the UK with rising taxable sales then you need to pay uk vat to enjoy all benefits provided by this taxation system. Once your taxable sales touch the vat threshold limit of ?70,000 during the past 12 months then you need to apply for vat registration so that you can also end up part of this tax system that is in effect in the majority of Europe.
If you are a really small trader that mostly sells retail goods then you can remain out of 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 let’s say you sell goods to vat registered traders you would be better off being a vat registered trader in the United Kingdom. Vat has been employed as a way of collecting taxes on products or services in most 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 www.vatcontrol.com then you’ll have to make an application for vat registration. You can do so even before you reach this limit if you feel that you need to reclaim vat that has already been paid on goods and services, especially in a different eu country where this method is followed. You ought to 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 so 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 a month once you file an online vat application then you will have to charge vat as per the 14,000 services and goods 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 regular rate of 17.5%, reduced vat rate of 5%, as well as the zero vat rate. Certain goods and services are totally vat exempt too.
As soon as you are a vat registered trader so as to pay and collect uk vat based on vat invoices then you will also need to file your vat returns on a regular basis. Again, your vat agent is going to be necessary to calculate vat to get paid or refunded based on your vat purchases and sales. If you have imported goods or services 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 eight 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 are 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. You can now collect and pay uk vat while also claiming any vat previously paid on imported products or services, which will will lower tax overheads to some large extent.