Know all about the increase in hmrc vat rates in the coming year

In case you have a running business in the UK or intend to start one you then ought to know all about the rise in hmrc vat rates in the coming year. This should help you to quickly incorporate all the necessary modifications to your vat invoices and vat returns, and help you to keep on running your business without interruptions.

Just like most other Countries in Europe, the UK too has embraced vat or value added tax as a system for avoiding double taxation on goods and reducing tax leaks. If your current taxable sales exceed £70,000 pounds during the past 12 months you’ll be able to make an application for vat registration and turn a vat registered dealer. This move will allow you to receive a vat number which will have to be mentioned in each vat invoice that you issue to your customers. This vat invoice will also have to say the vat rate charged and your vat returns too will need to mention all applicable vat rates and amounts in detail.

Currently, the United Kingdom has 3 vat rates as decided by the hm revenue and customs department or hmrc. The standard vat rate is 17.5% that is slated to raise to 20% from January 4, 2011. You will thus need to issue tax invoices using the new standard rates from January 4, 2011 onwards and also file your vat return in line with the new vat rates. The lower vat rate of 5% is slated to stay similar to well as the zero vat rate. Vat exempt rates and classifications too are slated to stay the same. To be on the safe side, you need to however, ask your vat agent or consultant to remain glued to all alterations in uk vat in addition to eu vat rules, particularly if you import goods or services from member EU countries that follow vat.

Come January 4, 2011 and the vat threshold limit, and the flat rate vat scheme limit too might be changed to incorporate the modification in standard vat rates. However, in case you have already paid vat on goods and services in another country before these were imported into the UK then you will still be able to request vat reclaim by completing the requisite vat form. In case of any doubts you can always visit the hmrc vat website whilst utilizing various vat online services offered by the department. Several other eu countries too have either raised or intend to raise vat rates in the near future as numerous countries had offered special rates to tide over the economic recession.

It is thus essential that you clearly understand the implications of increased vat rates on your business before, during and after the alternation in vat rates. This should help you to file your vat returns correctly while also charging revised vat rates to the customers. You can anyway also disclose any errors that may have been committed during the transition period to the hmrc department and also make necessary adjustments in your next vat return as per them.

The increase in standard vat rates from 17.5% to 20% from January 4, 2011 will result in a marginal increase in costs. However, this variation will also have to be reflected in coming vat returns and calculations. You need to make it a point to know all about the rise in hmrc vat rates within the coming year so that your business has a seamless transition into the New Year.