If you are 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 http://www.vatcheck.com. Once your taxable sales touch the vat threshold limit of ?70,000 during the past 12 months then you’ll need to get vat registration in order that you can also end up part of this tax system that is in effect in the majority of European countries.
If you are a very small trader that mostly sells retail goods you’ll be able to remain out of the purview of vat or value added tax as long as your taxable sales do not touch ?70,000 in Twelve months. However, if your sales touch that figure or let’s say you sell goods to vat registered traders then you would be better off as a vat registered trader in the United Kingdom. Vat continues to be employed as a means of collecting taxes on goods and services in most of Europe and 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 VAT then you’ll need to apply for vat registration. That can be done before you reach this limit if you think that you need to reclaim vat that has already been paid on services and goods, specifically in a different eu country where this method is followed. You ought to hire the services of experienced vat agent well conversed in uk and eu vat rules for vat registration purposes as well as for filing of vat refunds so 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 could 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 have to be done through 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%, as well as the zero vat rate. Certain goods and services are totally vat exempt too.
Once you turn into 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 regularly. Again, your vat agent will be required to calculate vat to get paid or refunded depending on your vat purchases and sales. If you have imported goods or services in the UK after paying vat in a eu country then you can definitely 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 an excellent tax system to prevent double taxation and also plug many loopholes that 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 need to keep the cycle of vat alive by getting to be a vat registered trader. You can now collect and pay uk vat while also claiming any vat previously paid on imported products or services, which will will reduce your tax overheads to a large extent.