If you are a trader in the United Kingdom 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 Twelve months then you need to apply for vat registration so that you can also become part of this tax system that’s in force in most 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 so long as your taxable sales don’t touch ?70,000 in Twelve 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 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 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 number search then you’ll need to make an application for vat registration. You can do so even before you reach this limit if you feel that you need to reclaim vat that has previously been paid on services and goods, specifically in a foreign eu country where this method is followed. You should hire the services of an experienced vat agent well conversed in uk and eu vat rules for vat registration purposes as well as for filing of vat refunds to ensure that there are no problems in claiming back vat.
As soon as you do turn into a vat registered trader in the United Kingdom, which could take up to 30 days after you file a web-based vat application then you will need to charge vat according to the 14,000 goods and services classifications given by the hmrc vat department. This will have to be done through each vat invoice that you will be required 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 goods and services 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’ll also need to file your vat returns on a regular basis. Again, your vat agent will be required to calculate vat to be paid or refunded depending 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 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 a good tax system to avoid double taxation and also plug many loopholes that were present in the traditional sales tax system.
If you are a growing trader in the UK that sells taxable goods to vat registered traders then you will want to keep the cycle of vat alive by turning into a vat registered trader. You can now collect and pay uk vat whilst claiming any vat previously paid on imported goods and services, which will will reduce your tax overheads to a large extent.