If you’re a trader in the United Kingdom with rising taxable sales then you need to pay uk vat to enjoy all benefits offered by this taxation system Http://www.vatcheck.com. Once your taxable sales touch the vat threshold limit of ?70,000 in the past 12 months then you’ll need to get vat registration so that you too can end up part of this tax system that is in effect in the majority of European countries.
If you’re 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 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 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 United Kingdom 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 apply for vat registration. You can do so even before you reach this limit if you think that you have 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 an 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 could take up to a month once you file a web-based vat application then you’ll need to charge vat as per the 14,000 services and goods classifications provided by the hmrc vat department. This will need to be carried out by 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.
Once you turn into a vat registered trader in order to pay and collect uk vat determined by vat invoices then you will also have to file your vat returns regularly. Again, your vat agent is going to be required to calculate vat to be paid or refunded based on your vat purchases and sales. In case you have imported services or goods 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 and the member country. Overall, vat is a good tax system to avoid double taxation and also 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 need to keep the cycle of vat alive by turning into a vat registered trader. You can now collect and pay uk vat while also claiming any vat previously paid on imported goods and services, which will will lower tax overheads to some large extent.