If you have crossed the threshold limit or wish to be a part of the vat or value added tax system then you will need to make an application for registration for vat to turn into a vat registered trader. Once you turn into a vat registered trader then you will be empowered to reclaim vat paid in another eu country and thereby lower your costs as well as enhance your business cash flow.
Several eu countries including the UK, Spain, Poland, Sweden, Italy, Germany, etc have moved over to vat for taxing products or services. Vat is thus followed whilst trading between member eu countries. If you have started a fresh business in the UK and have touched ?70,000 pounds in taxable sales in the past 12 months then you can definitely make an application 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 goods or services 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, once you make an application for vat registration your costs could increase slightly, and when you sell your products or services locally in the United Kingdom at a retail level then you may opt to remain outside vat if you only sell vat exempt goods. However, if you try to artificially make an effort to separate your enterprise activities only to remain away from system of vat then this hmrc vat department might not take your actions lightly in case you are discovered doing precisely the same. There are many advantages of entering the vat system as it will avoid the problem of double taxation by permitting you to reclaim vat already paid on services or goods overseas too.
The entire process for registration for vat is pretty simple however, if you are not sure about yourself then you definitely 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 through your vat agent too provided you inform the department of your choosing. Once you make an application for vat registration then the process of approving your application usually takes between 10 to 30 days. Until then you can continue issuing regular invoices to your clients. However, in 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 approved you will receive your unique vat registration number and can 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 the invoice together with your vat no at the top. You will have to give a summary of all vat paid and collected in your vat returns that will need to be filed periodically as required by the hmrc vat department. If you have already paid vat on products or services in another eu country then you can certainly try for vat reclaim once you’re an official vat registered trader.
Vat registration is a simple online procedure that needs to be done first if you wish to turn into a vat registered trader in the UK. You can simply fill up the web based vat registration form and submit it to your hmrc vat department whenever you make an application for registration for vat.