If you have crossed the threshold limit or wish to be a part of the vat or value added tax system then you will need to make an application for registration for vat to turn into a vat registered trader. When you finally turn into a vat registered trader then you will be empowered to reclaim vat paid in another eu country and thereby lower your costs as well as improve your business cash flow.
Several eu countries including the UK, Spain, Poland, Sweden, Italy, Germany, etc have moved over to vat for taxing goods and services. Vat is thus followed even while trading between member eu vat validation countries. In case you have started a fresh business in the UK and have touched ?70,000 pounds in taxable sales during the past 12 months then you can definitely make an application for vat registration with the HM Revenue and Customs or hmrc department. You can even 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 an individual, partnership, company, trust, etc as deemed fit by the hmrc department.
However, once you make an application for vat registration your costs could increase slightly, and when you sell your goods and services locally in the United Kingdom at a retail level then you could opt to remain outside vat if you only sell vat exempt goods. However, if you try to artificially make an effort to separate your business activities only to remain away from system of vat then the hmrc vat department may not take your actions lightly if you’re discovered doing precisely the same. There are many advantages of entering the vat system since it will avoid the problem of double taxation by allowing you to definitely reclaim vat already paid on services or goods in another country too.
The entire process for registration for vat is pretty simple but 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 make an application for vat through your vat agent too provided you inform the department of your choice. Once you make an application for vat registration then the process of approving the application typically takes between 10 to 30 days. Until then you can keep issuing regular invoices to your clients. However, during that period you will have to take into account applicable vat rates and re-issue those invoices issued after your application so that 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 may need to display it on all vat documents including your vat invoices, vat returns, and vat refunds. You will also need to issue a vat invoice that separately shows all vat rates applied in that invoice together with your vat no at the top. You will need to give a summary of all vat paid and collected in your vat returns which will have to be filed periodically as needed by the hmrc vat department. In case you have already paid vat on products or services in another eu country then you can certainly try for vat reclaim once you’re 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 UK. You can easily fill the web based vat registration form and submit it to the hmrc vat department when you make an application for registration for vat.