Know everything about the rise in hmrc vat rates in the coming year

In case you have a running business in the United Kingdom or plan to start one then you ought to know everything about the rise in hmrc vat rates from the coming year. This should help you to quickly incorporate all of the necessary modifications to your vat invoices and vat returns, and help you to carry on running your enterprise without interruptions.

Much like most other Countries in Europe, the UK too has embraced vat or value added tax to be a system for avoiding double taxation on goods and reducing tax leaks. In case your current taxable sales exceed £70,000 pounds in the past 12 months you’ll be able to apply for vat registration and turn a vat registered dealer. This move will allow you to receive a vat number which will have to be mentioned in each vat invoice that you issue to your customers. This vat invoice may also have to say the vat rate charged as well as your vat returns too will have to mention all applicable vat rates and amounts in detail.

Currently, the United Kingdom has 3 vat rates as decided by the hm revenue and customs department or hmrc. The regular vat rate is 17.5% that is slated to increase to 20% from January 4, 2011. You’ll thus need to issue tax invoices using the new standard rates from January 4, 2011 onwards and also file your vat return based on the new vat rates. The lower vat rate of 5% is slated to stay the same as well as the zero vat rate. Vat exempt rates and classifications too are slated to remain exactly the same. To be secure and safe, you should however, ask your vat agent or consultant to stay glued to any or all alterations in uk vat as well as eu vat rules, especially if you import services or goods from member EU countries that follow vat.

Come January 4, 2011 and the vat threshold limit, and the flat rate vat scheme limit too will be changed to include the change in standard vat rates. However, in case you have already paid vat on goods and services abroad before they were imported into the UK then you’ll still be able to ask for vat reclaim by filling out the requisite vat form. In the case of any doubts you could go to the hmrc vat website while also utilizing various vat online services offered by the department. Several other eu countries too have either raised or intend to raise vat rates in the future as many countries had offered special rates to tide over the economic slowdown.

It’s thus essential that you clearly comprehend the implications of increased vat rates on your own business before, during and after the alternation in vat rates. This should help you to file for your vat returns correctly while also charging revised vat rates to the customers. You can anyway also disclose any errors that might have already been committed through the transition period to the hmrc department and even make necessary adjustments within your next vat return as specified by them.

The increase in standard vat rates from 17.5% to 20% from January 4, 2011 will lead to a marginal increase in costs. However, this change may also have to be reflected in coming vat returns and calculations. You should make it a point to know all about the increase in hmrc vat rates in the coming year so your business carries a seamless transition to the New Year.