If you’re a trader in the United Kingdom with rising taxable sales you will need to pay uk vat to relish all benefits provided by this taxation system Vatcheck.com. Once your taxable sales touch the vat threshold limit of ?70,000 in the past Twelve months then you’ll need to get vat registration in order that you can also become part of this tax system that is in effect in most Europe.
If you are a really small trader that mostly sells retail goods you’ll be able to remain out of the purview of vat or value added tax so long as your taxable sales don’t touch ?70,000 in Twelve 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 United Kingdom. Vat continues to be employed as a way of collecting taxes on products or 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 then you will have to make an application for vat registration. That can be done before you reach this limit if you feel that you have to reclaim vat which has already 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.
Once you do turn into a vat registered trader in the United Kingdom, which could extend 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 provided by the hmrc vat department. This will need to be done through each vat invoice that you will be needed to issue during each taxable sale. UK has 3 vat rates beginning with the regular rate of 17.5%, reduced vat rate of 5%, as well as 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 will also need to file your vat returns on a regular basis. Again, your vat agent will be necessary to calculate vat to be paid or refunded depending on your vat purchases and sales. In case you have imported goods or services in the UK after paying vat within a eu country then you can avoid double taxation by filing a vat reclaim form. You will be awarded vat refund between four to eight months after your claim is successfully processed by hmrc and the member country. Overall, vat is a good tax system to prevent double taxation as well as plug many loopholes which were found in the traditional sales tax system.
If you are 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 products or services, which in turn will lower tax overheads to a large extent.