If you’re a trader in the United Kingdom with rising taxable sales then you need to pay uk vat to enjoy all benefits provided by this taxation system. Once your taxable sales touch the vat threshold limit of ?70,000 in the past vatnumbers.com Twelve months then you need to get vat registration in order that you too can become part of this tax system that is in effect in most Europe.
If you are 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 don’t touch ?70,000 in Twelve months. However, in case your sales touch that figure or if you sell goods to vat registered traders you would be better off being a vat registered trader in the United Kingdom. Vat continues to be employed as a means of collecting taxes on products or services in most of Europe as well as the UK too follows this system. 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 then you will have to apply 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 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 United Kingdom, which may extend to a month after you file a web-based vat application then you’ll need to charge vat as per the 14,000 services and goods classifications given by the hmrc vat department. This will likely have to be done through each vat invoice that you will be required to issue during each taxable sale. UK has 3 vat rates starting 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 are 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 regularly. Again, your vat agent is going to be necessary to calculate vat to get paid or refunded based on your vat purchases and sales. In case you have imported goods or services 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 8 months after your claim is successfully processed by hmrc as well as the member country. Overall, vat is a good tax system to avoid double taxation and also plug many loopholes which were found in the conventional sales tax system.
If you are 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. You can now collect and pay uk vat whilst claiming any vat previously paid on imported goods and services, which will will lower tax overheads to a large extent.