In case you have crossed the threshold limit or want to be a part of the vat or value added tax system then you’ll need to make an application for registration for vat to turn into a vat registered trader. When you finally turn into a vat registered trader then you will be empowered to reclaim vat paid in another eu country and thereby lower your costs and also improve your business cash flow.
Several eu countries like the UK, Spain, Poland, Sweden, Italy, Germany, etc have moved over to vat for taxing products or services. Vat is thus followed even while trading between member eu countries. If you have started a fresh business in the United Kingdom and also have touched ?70,000 pounds in taxable sales during the past 1 year then you can apply for vat registration with the HM Revenue and Customs or hmrc department. You may also apply before threshold limit is achieved if you sell your services or goods to mostly vat registered traders. Vat registration can be achieved as being an individual, partnership, company, trust, etc as deemed fit by the hmrc department.
However, as soon as you make an application for vat registration then your costs could increase slightly, and when you sell your goods and services locally in the United Kingdom at the retail level then you could choose to remain outside vat should you only sell vat exempt goods. However, if you try to artificially make an effort to separate your business activities simply to remain outside the system of vat then this hmrc vat department may not take your actions lightly in case you are discovered doing the same. There are several benefits of entering the vat system as it will prevents the problem of double taxation by permitting you to reclaim vat already paid on goods or services overseas too.
The entire process for registration for vat is quite simple but if you aren’t sure about yourself then you definitely should simply appoint a professional vat agent to handle all vat matters. The hmrc vat department offers several vat online services including applications for registration for vat. You are able to apply for vat using your vat agent too provided you inform the department of your choosing. Once you apply for vat registration then this procedure for approving your application usually takes between 10 to 30 days. Fo the time being you can continue issuing regular invoices to your clients. However, during that period you will have to factor in applicable vat rates and re-issue those invoices issued after the application so that your clients can reclaim vat from other end.
Once your application is eligible then you will receive your distinct vat registration number and will need to display it on all vat documents including your vat invoices, vat returns, and vat refunds. You will also need to issue a vat invoice that separately shows all vat rates applied in that invoice along with your vat no at the top. You will have to give a breakdown of all vat paid and collected in your vat returns that will have to be filed periodically as needed by the hmrc vat department. In case you have already paid vat on products or services in another eu country then you can certainly try for vat reclaim once you are an official vat registered trader.
Vat registration is a straightforward online process that needs to be done first if you wish to turn into a vat registered trader in the United Kingdom. You can easily fill the web based vat registration form and submit it to your hmrc vat department whenever you make an application for registration for vat.