If you have crossed the threshold limit or want to be a part of the vat or value added tax system then you’ll need to apply for registration for vat to turn into a vat registered trader. When you finally are a vat registered trader then you will be empowered to reclaim vat paid in another eu country and thereby lower your costs and also enhance your business cash flow.
Several eu countries like the UK, Spain, Poland, Sweden, Italy, Germany, etc have moved over to vat for taxing goods and services. Vat is thus followed whilst trading between member eu countries. In case you have started a new business in the UK and also have touched ?70,000 pounds in taxable sales during the past 12 months then you can make an application for vat registration with the HM Revenue and Customs or hmrc department. You may also apply before threshold limit is achieved if you sell your goods or services to mostly vat registered traders. Vat registration can be done as being an individual, partnership, company, trust, etc as deemed fit by the hmrc department.
However, as soon as you apply for vat registration then your costs could increase slightly, and when you sell your goods and services locally in the UK at a retail level then you may choose to remain outside of vat if you only sell vat exempt goods. However, if you try to artificially make an effort to separate your enterprise activities simply to remain outside the system of vat then this hmrc vat department may not take your actions lightly if you’re discovered doing precisely the same. There are many benefits of entering the vat system since it will avoid the problem of double taxation by allowing you to reclaim vat already paid on services or goods in another country too.
The whole process for registration for vat is pretty simple however, if you aren’t sure about yourself then you definitely should simply appoint an expert vat agent to deal with all vat matters. The hmrc vat department offers several vat online services including applications for registration for vat. You are able to apply for vat using your vat agent too provided you inform the department of your choosing. Once you make an application for vat registration then this process of approving the application typically takes between 10 to 30 days. Until then you can continue issuing regular invoices to your clients. However, in that period you will need to take into account applicable vat rates and re-issue those invoices issued after your application so that your clients can reclaim vat from their end.
Once your application is eligible then you will receive your unique vat registration number and may need to display it on all vat documents including your vat invoices, vat returns, and vat refunds. You will also have to issue a vat invoice that separately shows all vat rates applied in the invoice along with your vat no at the very top. You will have to provide a summary of all vat paid and collected within your vat returns that will have to be filed periodically as needed by the hmrc vat department. In case you have already paid vat on goods and services in another eu country then you can certainly apply for vat reclaim once you’re a certified vat registered trader.
Vat registration is a straightforward online process that has to be done first if you wish to turn into a vat registered trader in the United Kingdom. You can easily fill up the online vat registration form and submit it to the hmrc vat department when you apply for registration for vat.