If you are a trader in the United Kingdom with rising taxable sales then you need to pay uk vat to relish all benefits provided by this taxation system. As soon as your taxable sales touch the vat threshold limit of ?70,000 in the past Twelve months then you’ll need to get vat registration so that you too can end up part of this tax system that’s in force in the majority of European countries.
If you’re a very small trader that mostly sells retail goods you’ll be able to remain from the purview of vat or value added tax so long as your taxable sales don’t touch ?70,000 in Twelve months. However, if your sales touch that figure or let’s say you sell goods to vat registered traders then you would be better off being 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 www.vatcontrol.com then you will need to make an application for vat registration. You can do so even before you reach this limit if you feel that you need to reclaim vat which has previously been paid on goods and services, specifically in a different eu country where this system is followed. You ought to do the hiring 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 United Kingdom, which may extend to 30 days once you file an online vat application then you’ll have to charge vat as per the 14,000 services and goods classifications given by the hmrc vat department. This will need to be done through each vat invoice 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%, as well as the zero vat rate. Certain services and goods are totally vat exempt too.
Once you are a vat registered trader in order to pay and collect uk vat based on vat invoices then you will also have to file your vat returns regularly. 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 services or goods in the United Kingdom after paying vat in a eu country then you can 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 and the member country. Overall, vat is a good tax system to prevent double taxation and also plug many loopholes that were found in the traditional sales tax system.
If you’re a growing trader in the United Kingdom that sells taxable goods to vat registered traders then you need to maintain 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 products or services, which will will reduce your tax overheads to a large extent.