If you are 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. Once your taxable sales touch the vat threshold limit of ?70,000 in the past vatnumbers.com 12 months then you need to apply for vat registration so that you too can end up part of this tax system that is in force in the majority of European countries.
If you’re a really small trader that mostly sells retail goods you’ll be able to remain from the purview of vat or value added tax as long as your taxable sales do not touch ?70,000 in Twelve months. However, in case your sales touch that figure or let’s say you sell goods to vat registered traders then you would be better off as 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 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 then you will have to make an application for vat registration. That can be done even before you reach this limit if you feel that you have to reclaim vat that has already been paid on services and goods, specifically in a foreign eu country where this method is followed. You ought to 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 so that there aren’t any problems in claiming back vat.
As soon as you do turn into a vat registered trader in the United Kingdom, which could extend to a month after you file a web-based vat application then you’ll have to charge vat according to the 14,000 goods and services classifications given by the hmrc vat department. This will likely 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 standard 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 in order to pay and collect uk vat determined by vat invoices then you’ll also have to file your vat returns regularly. Again, your vat agent will be required 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’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 present in the traditional 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 while also claiming any vat previously paid on imported goods and services, which will will lower tax overheads to some large extent.