In case you have crossed the threshold limit or want to become 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. Once you are a vat registered trader you will then be empowered to reclaim vat paid in another eu country and thereby lower your costs and also improve 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 whilst trading between member eu vatvalidation 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 done as being an individual, partnership, company, trust, etc as deemed fit by the hmrc department.
However, once you make an application for vat registration then your costs could increase slightly, and if you sell your products or services locally in the United Kingdom 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 enterprise activities simply to remain away from system of vat then this hmrc vat department might not take your actions lightly in case you are discovered doing the same. There are many advantages of entering the vat system as it will avoid the problem of double taxation by permitting 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 a professional 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 through your vat agent too provided you inform the department of your choosing. As soon as you make an application for vat registration then this process of approving the application usually 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 take into account applicable vat rates and re-issue those invoices issued after the application so your clients can reclaim vat from their end.
As soon as your application is approved then you will receive your unique vat registration number and can need to display it on all vat documents as well as your vat invoices, vat returns, and vat refunds. You will also have to issue a vat invoice that separately shows all vat rates applied in that invoice along with your vat no at the top. You will have to provide a breakdown of all vat paid and collected within your vat returns that 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 certainly try for vat reclaim once you are a certified vat registered trader.
Vat registration is a simple online process that has to be done first if you wish to turn into a vat registered trader in the United Kingdom. You can simply fill up the web based vat registration form and submit it to your hmrc vat department when you apply for registration for vat.