In case 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 turn into 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 whilst trading between member eu countries. If you have started a fresh business in the UK and also have touched ?70,000 pounds in taxable sales during the past 1 year then you can apply for vat registration with the HM Revenue and Customs or hmrc department. You may also apply before this threshold limit is achieved if you sell your services or goods to mostly vat registered traders. Vat registration can be achieved as an individual, partnership, company, trust, etc as deemed fit by the hmrc department.
However, once you apply for vat registration your costs could increase slightly, and if you sell your goods and services locally in the UK at the retail level then you could choose 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 this hmrc vat department may not take your actions lightly in case you are discovered doing precisely the same. There are many advantages of entering the vat system as it will prevents the problem of double taxation by permitting you to definitely reclaim vat already paid on goods or services in another country too.
The whole process for registration for vat is quite simple but if you are not sure about yourself then you definitely should simply appoint an expert vat agent to handle all vat matters. The hmrc vat department offers several vat online services including applications for registration for vat. You can make an application for vat using your vat agent too provided you inform the department of your choosing. Once you make an application for vat registration then this procedure for approving your application typically takes between 10 to 30 days. Fo the time being you can continue issuing regular invoices to your clients. However, in that period you will need to factor in applicable vat rates and re-issue those invoices issued after the application so that your clients can reclaim vat from their end.
As soon as your application is eligible then you will receive your distinct vat registration number and may have 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 the invoice along with your vat no at the very top. You will have to provide a summary of all vat paid and collected within your vat returns which will need 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 try for vat reclaim once you are an official vat registered trader.
Vat registration is a straightforward online procedure that has to be done first if you want to turn into a vat registered trader in the UK. You can easily fill the web based vat registration form and submit it to your hmrc vat department when you make an application for registration for vat.