If you’re a trader in the UK with rising taxable sales then you need to pay uk vat to enjoy all benefits provided by this taxation system. Once your taxable sales touch the vat threshold limit of ?70,000 in the past vatnumbers Twelve months then you need to get vat registration in order that you can also end up part of this tax system that is in force in most European countries.
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, if your sales touch that figure or let’s say you sell goods to vat registered traders you would be better off as a vat registered trader in the UK. Vat continues to be employed as a way of collecting taxes on products or services in most of Europe and 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 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 need to reclaim vat that has already been paid on goods and services, specifically in a foreign eu country where this method is followed. You ought to do the hiring of an experienced vat agent well conversed in uk and eu vat rules for vat registration purposes and for filing of vat refunds to ensure that there aren’t any problems in claiming back vat.
As soon as you do turn into a vat registered trader in the UK, which may extend to a month after you file a web-based vat application then you’ll need to charge vat as per the 14,000 goods and services classifications provided by the hmrc vat department. This will likely need to be carried out by each vat invoice you will be needed to issue during each taxable sale. UK has 3 vat rates starting 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 are 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 is going to be necessary to calculate vat to get paid or refunded based on your vat purchases and sales. In case you have imported goods or services in the United Kingdom after paying vat within 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 which were found in the conventional 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 getting to be a vat registered trader. You can now collect and pay uk vat whilst claiming any vat previously paid on imported products or services, which will will reduce your tax overheads to some large extent.