If you’re 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 in the past Twelve months then you’ll need to get vat registration in order that you can also end up part of this tax system that is in force in the majority of Europe.
If you’re a very small trader that mostly sells retail goods then you can remain out of the purview of vat or value added tax so long as your taxable sales don’t touch ?70,000 in Twelve months. However, if 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 UK. 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 United Kingdom is headed by HM Revenue and Customs or hmrc department.
After you have crossed over the vat threshold limit for uk vat control then you will need to make an application for vat registration. You can do so before you reach this limit if you think that you need to reclaim vat which has previously been paid on services and goods, specifically in a foreign eu country where this system is followed. You should hire the services of experienced vat agent well conversed in uk and eu vat rules for vat registration purposes as well as for filing of vat refunds so that there aren’t any problems in claiming back vat.
As soon as you do turn into a vat registered trader in the UK, which may take up to a month after you file a web-based vat application then you will have to charge vat as per the 14,000 services and goods classifications given by the hmrc vat department. This will need to be done through each vat invoice you will be required to issue during each taxable sale. UK has 3 vat rates beginning with the regular rate of 17.5%, reduced vat rate of 5%, as well as the zero vat rate. Certain goods and services are totally vat exempt too.
As soon as you turn into a vat registered trader so as to pay and collect uk vat based on vat invoices then you will also need to file your vat returns on a regular basis. 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 services or goods in the United Kingdom after paying vat within a eu country then you can definitely 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 an excellent tax system to prevent double taxation as well as plug many loopholes that were found in the conventional sales tax system.
If you are 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 turning into a vat registered trader. You can now collect and pay uk vat whilst claiming any vat previously paid on imported products or services, which will will lower tax overheads to a large extent.