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 turn into a vat registered trader you will then be empowered to reclaim vat paid in another eu country and thereby lower your costs as well as enhance your business cash flow.
Several eu countries including the UK, Spain, Poland, Sweden, Italy, Germany, etc have moved over to vat for taxing products or services. Vat is thus followed even while trading between member eu countries. If you have started a new business in the United Kingdom and have touched ?70,000 pounds in taxable sales in the past 12 months then you can definitely apply for vat registration with the HM Revenue and Customs or hmrc department. You may also apply before this threshold limit is achieved if you sell your goods or services to mostly vat registered traders. Vat registration can be achieved as being an individual, partnership, company, trust, etc as deemed fit by the hmrc department.
However, as soon as you apply for vat registration your costs could increase slightly, and if you sell your goods and services locally in the UK at the retail level then you could choose to remain outside of vat if you only sell vat exempt goods. However, if you try to artificially try to separate your business activities only to remain outside the system of vat then the hmrc vat department may not take your actions lightly in case you are discovered doing precisely the same. There are several benefits of entering the vat system as it will avoid the problem of double taxation by permitting you to definitely reclaim vat already paid on goods or services in another country too.
The whole process for registration for vat is pretty simple however, if you are not sure about yourself then you definitely should simply appoint an expert vat agent to handle all vat matters. The hmrc vat department offers several vat online services including applications for registration for vat. You can apply for vat through your vat agent too provided you inform the department of your choosing. As soon as you apply for vat registration then this procedure for approving your application typically takes between 10 to 30 days. Fo the time being you can keep issuing regular invoices to your clients. However, in that period you will have to factor in applicable vat rates and re-issue those invoices issued after the application so that your clients can reclaim vat from their end.
Once your application is approved you will receive your distinct vat registration number and can need to display it on all vat documents as well as your vat invoices, vat returns, and vat refunds. You will also need to issue a vat invoice that separately shows all vat rates applied in that invoice together with your vat no at the top. You will need to provide a breakdown of all vat paid and collected in your vat returns that will need to be filed periodically as required by the hmrc vat department. In case you have already paid vat on products or services in another eu country then you can certainly try for vat reclaim once you’re an official vat registered trader.
Vat registration is a straightforward online procedure 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 your hmrc vat department when you make an application for registration for vat.