If you’re a trader in the United Kingdom with rising taxable sales then you need to pay uk vat to enjoy all benefits offered by this taxation system. Once your taxable sales touch the vat threshold limit of ?70,000 in the past 12 months then you’ll need to apply for vat registration so that you too can end up part of this tax system that’s in effect in the majority of Europe.
If you’re a really small trader that mostly sells retail goods you’ll be able to remain from the purview of vat or value added tax so long as your taxable sales do not touch ?70,000 in Twelve months. However, in case your sales touch that figure or let’s say you sell goods to vat registered traders then you would be better off being a vat registered trader in the United Kingdom. Vat continues to be employed as a means of collecting taxes on goods and services in the majority of of Europe and the UK too follows this method. The vat department in the UK 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 will need to apply for vat registration. That can be done before you reach this limit if you think that you have to reclaim vat that has already been paid on goods and services, especially 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 take up to a month once you file a web-based vat application then you will need to charge vat as per the 14,000 goods and services classifications given by the hmrc vat department. This will likely have to be carried out by each vat invoice you will be needed to issue during each taxable sale. UK has 3 vat rates beginning with the standard rate of 17.5%, reduced vat rate of 5%, and the zero vat rate. Certain goods and services are totally vat exempt too.
As soon as you turn into a vat registered trader in order to pay and collect uk vat based on vat invoices then you will also need to file your vat returns regularly. Again, your vat agent is going to be necessary to calculate vat to be paid or refunded based on your vat purchases and sales. In case you have imported goods or services in the United Kingdom after paying vat in a eu country then you can avoid double taxation by filing a vat reclaim form. You will 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 present in the traditional sales tax system.
If you’re a growing trader in the United Kingdom that sells taxable goods to vat registered traders then you need to keep the cycle of vat alive by getting to be a vat registered trader. Now you can collect and pay uk vat whilst claiming any vat previously paid on imported products or services, which will will lower tax overheads to some large extent.