If you’re a trader in the UK with rising taxable sales then you need to pay uk vat to relish all benefits offered by this taxation system. As soon as your taxable sales touch the vat threshold limit of ?70,000 during the past vat numbers Twelve months then you’ll need to get vat registration so that you too can end up 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 as long as your taxable sales don’t touch ?70,000 in 12 months. However, in case your sales touch that figure or if 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 most 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 have to make an application for vat registration. You can do so even 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 method is followed. You should hire the services of experienced vat agent well conversed in uk and eu vat rules for vat registration purposes and 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 take up to 30 days after you file an online vat application then you will need to charge vat according to the 14,000 services and goods classifications given by the hmrc vat department. This will likely have 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 regular rate of 17.5%, reduced vat rate of 5%, and the zero vat rate. Certain goods and services are totally vat exempt too.
As soon as you are a vat registered trader so as 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 is going to be necessary to calculate vat to get paid or refunded depending on your vat purchases and sales. If you have imported services or goods in the United Kingdom after paying vat in a eu country then you can 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 prevent double taxation as well as 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 need to keep the cycle of vat alive by turning into a vat registered trader. Now you can collect and pay uk vat whilst claiming any vat previously paid on imported goods and services, which in turn will lower tax overheads to some large extent.