If you’re a trader in the United Kingdom with rising taxable sales you will need to pay uk vat to relish all benefits provided by this taxation system Vatcheck.com. As soon as your taxable sales touch the vat threshold limit of ?70,000 during the past Twelve months then you’ll need to get vat registration so that you too can become part of this tax system that is in force in most Europe.
If you are a very small trader that mostly sells retail goods then you can remain from the purview of vat or value added tax so long as your taxable sales don’t touch ?70,000 in 12 months. However, in case your sales touch that figure or let’s say you sell goods to vat registered traders you would be better off being a vat registered trader in the United Kingdom. Vat has been employed as a means of collecting taxes on products or services in most of Europe and the UK too follows this method. The vat department in the UK is headed by HM Revenue and Customs or hmrc department.
After you have crossed over the vat threshold limit for uk VAT then you’ll have to make an application for vat registration. You can do so before you reach this limit if you think that you have to reclaim vat which has already been paid on services and goods, especially in a different 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 and for filing of vat refunds to ensure 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 could take up to a month once you file a web-based vat application then you will need to charge vat according to the 14,000 services and goods classifications given by the hmrc vat department. This will need to be done through each vat invoice that you will be needed 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 are a vat registered trader in order to pay and collect uk vat based on vat invoices then you’ll also need to file your vat returns on a regular basis. Again, your vat agent is going to be required to calculate vat to be paid or refunded based on your vat purchases and sales. In case you have imported goods or services in the UK 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 8 months after your claim is successfully processed by hmrc and the member country. Overall, vat is a good tax system to avoid double taxation as well as plug many loopholes which were present 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. Now you can collect and pay uk vat whilst claiming any vat previously paid on imported products or services, which will will lower tax overheads to some large extent.