If you have a running business in the United Kingdom or intend to start one then you should know all about the increase in hmrc vat rates in the coming year. This should help you to quickly incorporate all the necessary changes in your vat invoices and vat returns, and help you to carry on running your business without any interruptions.
Much like other Countries in Europe, the UK too has embraced vat or value added tax as a system for avoiding double taxation on goods and reducing tax leaks. If your current taxable sales exceed £70,000 pounds during the past Yr then you can apply for vat registration and turn into a vat registered dealer. This move will enable you to obtain a vat number that will have to be mentioned in each vat invoice which you issue to your customers. This vat invoice will also have to mention the vat rate charged as well as your vat returns too will need to mention all applicable vat rates and amounts in greater detail.
Currently, the UK has 3 vat rates as decided by the hm revenue and customs department or hmrc. The standard vat rates are 17.5% which is slated to raise to 20% from January 4, 2011. You will thus need to issue tax invoices with the new standard rates from January 4, 2011 onwards and also file your vat return based on the new vat rates. The reduced vat rate of 5% is slated to stay the same as well as the zero vat rate. Vat exempt rates and classifications too are slated to stay vat verification the same. In order to be secure and safe, you need to however, ask your vat agent or consultant to stay glued to all changes in uk vat in addition to eu vat rules, especially if you import goods or services from member EU countries that follow vat.
Come January 4, 2011 and the vat threshold limit, and also the flat rate vat scheme limit too will be changed to include the modification in standard vat rates. However, in case you have already paid vat on products or services in another country before they were imported into the UK then you’ll still be in a position to ask for vat reclaim by completing the requisite vat form. In the case of any doubts you can always go to the hmrc vat website while also utilizing various vat online services offered by the department. Other eu countries too have either raised or intend to raise vat rates in the near future as numerous countries had offered special rates to tide over the economic slowdown.
It is thus essential that you clearly comprehend the implications of increased vat rates on your business before, during and after the change in vat rates. This will help you to file your vat returns correctly while charging revised vat rates to the customers. You may anyway also disclose any errors that may have already been committed through the transition period to the hmrc department and also make necessary adjustments within your next vat return as specified by them.
The increase in standard vat rates from 17.5% to 20% from January 4, 2011 will lead to a marginal increase in costs. However, this variation may also have to get reflected in coming vat returns and calculations. You should make an effort to be aware of all about the increase in hmrc vat rates in the coming year so that your business has a seamless transition into the New Year.