If 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. Once you are a vat registered trader you will then be empowered to reclaim vat paid in another eu country and thereby lower your costs and also enhance your business cash flow.
Several eu countries like the UK, Spain, Poland, Sweden, Italy, Germany, etc have moved over to vat for taxing goods and services. Vat is thus followed even while trading between member eu countries. In case you have started a new business in the United Kingdom and have touched ?70,000 pounds in taxable sales in the past 12 months then you can make an application for vat registration with the HM Revenue and Customs or hmrc department. You can even 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 your costs could increase slightly, and if you sell your products or services locally in the UK at the retail level then you may choose to remain outside of vat if you only sell vat exempt goods. However, if you try to artificially try to separate your enterprise activities simply to remain away from system of vat then the hmrc vat department might not take your actions lightly in case you are discovered doing precisely the same. There are several advantages of entering the vat system since it will avoid the problem of double taxation by permitting you to definitely reclaim vat already paid on services or goods in another country too.
The entire process for registration for vat is quite simple but if you are not sure about yourself then you should simply appoint a professional vat agent to deal with 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 the procedure for approving the application typically takes between 10 to 30 days. Until then you can continue issuing regular invoices to your clients. However, during that period you will need to take into account applicable vat rates and re-issue those invoices issued after your application so your clients can reclaim vat from other end.
Once your application is eligible then you will receive your distinct vat registration number and can have to display it on all vat documents as well as your vat invoices, vat returns, and vat refunds. You will probably need to issue a vat invoice that separately shows all vat rates applied in that invoice together with your vat no at the very top. You will need to give a summary of all vat paid and collected within your vat returns which will have to be filed periodically as required by the hmrc vat department. If you have already paid vat on goods and services in another eu country then you can certainly apply for vat reclaim once you are an official vat registered trader.
Vat registration is a simple online process that needs to be done first if you wish to turn into a vat registered trader in the UK. You can easily fill the online vat registration form and submit it to the hmrc vat department when you apply for registration for vat.