If you have crossed the threshold limit or want to become a part of the vat or value added tax system then you will need to apply for registration for vat to turn into a vat registered trader. Once you are a vat registered trader you will then be empowered to reclaim vat paid in another eu country and thereby decrease your costs and also improve your business earnings.
Several eu countries including the UK, Spain, Poland, Sweden, Italy, Germany, etc have moved over to vat for taxing goods and services. Vat is thus followed even while trading between member eu countries. In case you have started a fresh business in the United Kingdom and have touched ?70,000 pounds in taxable sales during the past 12 months then you can definitely apply 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 done as being an individual, partnership, company, trust, etc as deemed fit by the hmrc department.
However, as soon as you make an application for vat registration then your costs could increase slightly, and when you sell your products or services locally in the United Kingdom at the retail level then you may opt to remain outside vat if you only sell vat exempt goods. However, if you try to artificially make an effort to separate your enterprise activities only to remain outside the system of vat then the hmrc vat department may not take your actions lightly if you’re discovered doing the same. There are many advantages of entering the vat system since it will avoid the problem of double taxation by permitting you to reclaim vat already paid on services or goods overseas too.
The entire process for registration for vat is quite simple however, if you aren’t sure about yourself then you definitely should simply appoint a professional vat agent to handle all vat matters. The hmrc vat department offers several vat online services including applications for registration for vat. You can apply for vat through your vat agent too provided you inform the department of your choosing. Once you make an application for vat registration then the process of approving the application typically takes between 10 to 30 days. Until then you can continue issuing regular invoices to your clients. However, in that period you will have to factor in 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 you will receive your distinct vat registration number and can need to display it on all vat documents including 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 top. You will need to give a summary of all vat paid and collected within your vat returns which will have to be filed periodically as required by the hmrc vat department. In case you have already paid vat on goods and services in another eu country then you can apply for vat reclaim once you’re an official 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 UK. You can easily fill the online vat registration form and submit it to the hmrc vat department when you apply for registration for vat.