If you’re a trader in the United Kingdom with rising taxable sales then you need to pay uk vat to relish all benefits provided by this taxation system. As soon as your taxable sales touch the vat threshold limit of ?70,000 in the past 12 months then you’ll need to apply for vat registration in order that you can also become part of this tax system that is in force in most Europe.
If you’re a really small trader that mostly sells retail goods you’ll be able to remain from the purview of vat or value added tax so long as your taxable sales do not touch ?70,000 in Twelve months. However, if your sales touch that figure or let’s say you sell goods to vat registered traders then you would be better off being a vat registered trader in the UK. Vat has been employed as a means of collecting taxes on goods and services in the majority of of Europe as well as the UK too follows this system. The vat department in the UK is headed by HM Revenue and Customs or hmrc department.
After you have crossed over the vat threshold limit for uk vat control then you will have to apply for vat registration. You can do so before you reach this limit if you feel that you have to reclaim vat that has already been paid on services and goods, specifically in a different eu country where this method is followed. You ought to hire the services of an 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 UK, which may extend to 30 days once you file a web-based vat application then you will have to charge vat according to the 14,000 goods and services classifications given by the hmrc vat department. This will need to be carried out by each vat invoice that you will be required to issue during each taxable sale. UK has 3 vat rates starting with the standard rate of 17.5%, reduced vat rate of 5%, as well as the zero vat rate. Certain goods and services are totally vat exempt too.
As soon as you turn into a vat registered trader in order to pay and collect uk vat based on vat invoices then you’ll also need to file your vat returns regularly. Again, your vat agent will be required to calculate vat to be paid or refunded based on your vat purchases and sales. In case you have imported services or goods in the United Kingdom after paying vat within 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 8 months after your claim is successfully processed by hmrc as well as the member country. Overall, vat is a good tax system to avoid double taxation and also plug many loopholes that were present in the traditional sales tax system.
If you’re a growing trader in the United Kingdom that sells taxable goods to vat registered traders then you will want to maintain the cycle of vat alive by turning into a vat registered trader. You can now collect and pay uk vat while also claiming any vat previously paid on imported goods and services, which will will reduce your tax overheads to a large extent.