In case you have crossed the threshold limit or want to be a part of the vat or value added tax system then you’ll need to apply for registration for vat to turn into a vat registered trader. When you finally turn into a vat registered trader you will then be empowered to reclaim vat paid in another eu country and thereby lower your costs as well as enhance your business cash flow.
Several eu countries like 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. If 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 can even 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 if you sell your products or services locally in the UK at a retail level then you may choose to remain outside of vat if you only sell vat exempt goods. However, if you try to artificially make an effort to separate your business activities simply to remain away from system of vat then this hmrc vat department might not take your actions lightly if you’re discovered doing the same. There are many benefits of entering the vat system since it will avoid the problem of double taxation by allowing you to reclaim vat already paid on services or goods overseas too.
The entire process for registration for vat is pretty simple however, if you are not sure about yourself then you should simply appoint an expert vat agent to deal with all vat matters. The hmrc vat department offers several vat online services including applications for registration for vat. You are able to apply for vat using your vat agent too provided you inform the department of your choice. Once you apply for vat registration then this procedure for approving your application usually takes between 10 to 30 days. Fo the time being you can keep issuing regular invoices to your clients. However, in that period you will have to take into account applicable vat rates and re-issue those invoices issued after the application so your clients can reclaim vat from their end.
Once your application is approved then you will receive your unique vat registration number and may need to display it on all vat documents as well as 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 have to give a breakdown of all vat paid and collected within your vat returns which will need to be filed periodically as needed by the hmrc vat department. If you have already paid vat on products or services in another eu country then you can apply for vat reclaim once you are 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 United Kingdom. You can easily fill up the web based vat registration form and submit it to your hmrc vat department whenever you apply for registration for vat.