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 http://vatcheck.com. Once you turn into a vat registered trader you will then be empowered to reclaim vat paid in another eu country and thereby lower your costs as well as improve 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 even while trading between member eu countries. If you have started a new business in the UK and have touched ?70,000 pounds in taxable sales in the past 1 year then you can 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 an individual, partnership, company, trust, etc as deemed fit by the hmrc department.
However, as soon as you apply for vat registration your costs could increase slightly, and when you sell your goods and 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 business 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 the same. There are several advantages of entering the vat system since it will avoid the problem of double taxation by allowing you to reclaim vat already paid on services or goods in another country too.
The whole process for registration for vat is pretty simple however, 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 can make an application for vat using your vat agent too provided you inform the department of your choosing. Once you apply for vat registration then this process of approving your 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 their end.
As soon as your application is eligible then you will receive your unique vat registration number and will 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 provide a summary of all vat paid and collected in your vat returns that will need to be filed periodically as needed by the hmrc vat department. In case you have already paid vat on goods and services in another eu country then you can try for vat reclaim once you’re a certified vat registered trader.
Vat registration is a straightforward online process that has to be done first if you wish to turn into a vat registered trader in the United Kingdom. You can simply fill the online vat registration form and submit it to your hmrc vat department when you apply for registration for vat.