If you’re a trader in the UK with rising taxable sales you will need to pay uk vat to enjoy all benefits provided by this taxation system. Once your taxable sales touch the vat threshold limit of ?70,000 during the past vatnumbers.com Twelve months then you’ll need to get vat registration in order that you can also become part of this tax system that’s in force in the majority of Europe.
If you are a really small trader that mostly sells retail goods then you can remain out of the purview of vat or value added tax so long as your taxable sales do not touch ?70,000 in 12 months. However, in case your sales touch that figure or if you sell goods to vat registered traders you would be better off being a vat registered trader in the United Kingdom. Vat continues to be employed as a way of collecting taxes on goods and services in the majority of of Europe as well as 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 then you’ll need to make an application for vat registration. That can be done before you reach this limit if you think that you have to reclaim vat that has previously been paid on services and goods, especially in a different eu country where this system is followed. You should do the hiring 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 United Kingdom, which could take up to 30 days once you file an online vat application then you will have to charge vat as per the 14,000 services and goods classifications given by the hmrc vat department. This will have to be done through each vat invoice you will be required to issue during each taxable sale. UK has 3 vat rates starting with the regular rate of 17.5%, reduced vat rate of 5%, and 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 necessary 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 definitely avoid double taxation by filing a vat reclaim form. You’ll 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 prevent double taxation and also plug many loopholes that were present in the conventional sales tax system.
If you are a growing trader in the United Kingdom that sells taxable goods to vat registered traders then you will want to keep 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 products or services, which in turn will lower tax overheads to a large extent.