If you’re a trader in the United Kingdom with rising taxable sales then you need to pay uk vat to enjoy all benefits offered by this taxation system. As soon as your taxable sales touch the vat threshold limit of ?70,000 in the past 12 months then you’ll need to apply for vat registration so that you too can become part of this tax system that is in force in the majority of Europe.
If you’re a really 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 do not touch ?70,000 in 12 months. However, if your sales touch that figure or if you sell goods to vat registered traders then you would be better off being a vat registered trader in the United Kingdom. Vat continues to be employed as a way of collecting taxes on goods and services in the majority of of Europe as well as the UK too follows this method. The vat department in the UK is headed by HM Revenue and Customs or hmrc department.
Once you have crossed over the vat threshold limit for uk http://vatnumbersearch.com then you will have to apply for vat registration. That can be done even before you reach this limit if you think that you have to reclaim vat that has already been paid on goods and services, especially in a foreign eu country where this method is followed. You should hire the services of an 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 are no problems in claiming back vat.
Once 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’ll need to charge vat according to the 14,000 goods and services classifications given by the hmrc vat department. This will likely have to be done through each vat invoice that you will be needed to issue during each taxable sale. UK has 3 vat rates starting with the regular rate of 17.5%, reduced vat rate of 5%, and the zero vat rate. Certain services and goods are totally vat exempt too.
Once you turn into a vat registered trader so as to pay and collect uk vat based on vat invoices then you’ll also have 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 depending on your vat purchases and sales. In case you have imported goods or services in the United Kingdom after paying vat in a eu country then you can definitely avoid double taxation by filing a vat reclaim form. You’ll 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 an excellent tax system to avoid double taxation and also plug many loopholes which were found in the conventional sales tax system.
If you’re a growing trader in the UK that sells taxable goods to vat registered traders then you will want to maintain 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 products or services, which will will reduce your tax overheads to a large extent.