If you’re 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 Vatcheck.com. As soon as your taxable sales touch the vat threshold limit of ?70,000 during the past Twelve months then you’ll need to apply for vat registration in order that you can also end up part of this tax system that’s in effect in most European countries.
If you are a really small trader that mostly sells retail goods then you can 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 then you would be better off being a vat registered trader in the UK. Vat has been employed as a way of collecting taxes on products or services in the majority of of Europe as well as 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 will have to make an application for vat registration. That can be done before you reach this limit if you think that you have to reclaim vat that has already been paid on services and goods, especially in a different eu country where this method is followed. You should 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 to ensure that there are no problems in claiming back vat.
Once 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 will need to charge vat according to the 14,000 services and goods classifications given by the hmrc vat department. This will have to be done through each vat invoice 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%, and the zero vat rate. Certain services and goods are totally vat exempt too.
Once you are a vat registered trader in order 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 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 in a eu country then you can definitely avoid double taxation by filing a vat reclaim form. You will be awarded vat refund between four to eight months after your claim is successfully processed by hmrc and the member country. Overall, vat is an excellent tax system to prevent double taxation as well as 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 maintain the cycle of vat alive by turning into a vat registered trader. Now you can collect and pay uk vat while also claiming any vat previously paid on imported goods and services, which will will lower tax overheads to a large extent.