If you’re a trader in the United Kingdom with rising taxable sales you will 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 Twelve months then you need to apply for vat registration so that you can also become part of this tax system that’s in effect in the majority of European countries.
If you are a really small trader that mostly sells retail goods you’ll be able to remain from the purview of vat or value added tax as long as your taxable sales do not touch ?70,000 in 12 months. However, in case your sales touch that figure or let’s say you sell goods to vat registered traders you would be better off as a vat registered trader in the United Kingdom. Vat continues to be employed as a means 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.
Once you have crossed over the vat threshold limit for uk www.vatcontrol.com then you will have to make an application for vat registration. You can do so before you reach this limit if you think that you need to reclaim vat that has already been paid on services and goods, specifically 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 are no problems in claiming back vat.
As soon as you do turn into a vat registered trader in the United Kingdom, which may take up to a month once you file a web-based vat application then you will need to charge vat as per the 14,000 services and goods classifications provided by the hmrc vat department. This will likely need to be done through each vat invoice you will be needed to issue during each taxable sale. UK has 3 vat rates beginning with the standard 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.
As soon as you turn into a vat registered trader in order to pay and collect uk vat determined by vat invoices then you’ll also have to file your vat returns on a regular basis. Again, your vat agent will be required to calculate vat to get paid or refunded depending on your vat purchases and sales. If you have imported goods or services in the United Kingdom after paying vat in a eu country then you can avoid double taxation by filing a vat reclaim form. You will be awarded vat refund between four to eight 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 as well as plug many loopholes which were found 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 need to maintain the cycle of vat alive by turning into a vat registered trader. Now you can collect and pay uk vat while also claiming any vat previously paid on imported goods and services, which in turn will reduce your tax overheads to some large extent.