If you are a trader in the UK with rising taxable sales then you need to pay uk vat to enjoy all benefits provided by this taxation system. As soon as your taxable sales touch the vat threshold limit of ?70,000 during the past http://vatnumbers.com Twelve months then you need to apply for vat registration in order that you can also become part of this tax system that is in effect in the majority of Europe.
If you are a very small trader that mostly sells retail goods you’ll be able to remain out of the purview of vat or value added tax so long as your taxable sales do not touch ?70,000 in Twelve months. However, if 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 UK. Vat has been employed as a means of collecting taxes on goods and services in most of Europe as well as the UK too follows this system. The vat department in the United Kingdom is headed by HM Revenue and Customs or hmrc department.
Once you have crossed over the vat threshold limit for uk then you’ll have to apply for vat registration. That can be done even before you reach this limit if you feel that you need to reclaim vat that has already been paid on services and goods, especially 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 as well as for filing of vat refunds so that there aren’t any problems in claiming back vat.
Once you do turn into a vat registered trader in the UK, which may take up to 30 days after you file an online vat application then you will have to charge vat as per the 14,000 goods and services classifications given by the hmrc vat department. This will likely need to be carried out by each vat invoice that you will be needed 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 goods and services 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 will also need to file your vat returns on a regular basis. Again, your vat agent is going to be necessary to calculate vat to be paid or refunded based on your vat purchases and sales. If you have imported goods or services in the United Kingdom after paying vat within a eu country then you can 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 an excellent tax system to avoid double taxation and also plug many loopholes that were present in the traditional sales tax system.
If you’re 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 while also claiming any vat previously paid on imported products or services, which will will reduce your tax overheads to a large extent.