If you are a trader in the UK with rising taxable sales then you need to pay uk vat to relish all benefits offered by this taxation system. As soon as your taxable sales touch the vat threshold limit of ?70,000 during the past https://vatnumbers.com Twelve months then you need to get vat registration so that you too can become part of this tax system that’s in force in most Europe.
If you are a very small trader that mostly sells retail goods you’ll be able to remain out of the purview of vat or value added tax as long as your taxable sales don’t 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 you would be better off as a vat registered trader in the United Kingdom. Vat has been employed as a way of collecting taxes on goods and services in most of Europe as well as the UK too follows this system. The vat department in the UK is headed by HM Revenue and Customs or hmrc department.
After you have crossed over the vat threshold limit for uk then you’ll 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 previously been paid on services and goods, 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 and 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 30 days once you file a web-based vat application then you will need to charge vat according to the 14,000 services and goods classifications provided by the hmrc vat department. This will likely need 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 regular 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 are a vat registered trader so as to pay and collect uk vat based on 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 depending on your vat purchases and sales. If you have imported goods or services in the United Kingdom after paying vat within a eu country then you can avoid double taxation by filing a vat reclaim form. You will be awarded vat refund between four to eight months after your claim is successfully processed by hmrc as well as the member country. Overall, vat is a good tax system to prevent double taxation and also plug many loopholes which were present in the traditional sales tax system.
If you are a growing trader in the UK 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 goods and services, which in turn will reduce your tax overheads to some large extent.