If you have crossed the threshold limit or want to become a part of the vat or value added tax system then you will need to make an application for registration for vat to turn into a vat registered trader. Once you are a vat registered trader you will then be empowered to reclaim vat paid in another eu country and thereby lower your costs and also improve 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. In case you have started a new business in the United Kingdom and also have touched ?70,000 pounds in taxable sales in the past 1 year then you can make an application 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, once you make an application for vat registration then your costs could increase slightly, and if you sell your goods and services locally in the UK at the retail level then you may opt to remain outside vat if you only sell vat exempt goods. However, if you try to artificially make an effort to separate your enterprise activities only to remain outside the system of vat then the hmrc vat department may not take your actions lightly if you’re discovered doing precisely the same. There are several advantages of entering the vat system since it will prevents 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 but 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 can make an application for vat through your vat agent too provided you inform the department of your choice. As soon as you make an application for vat registration then this procedure for approving the 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 your application so that your clients can reclaim vat from their end.
As soon as your application is eligible then you will receive your unique vat registration number and may have to display it on all vat documents including your vat invoices, vat returns, and vat refunds. You will probably have to issue a vat invoice that separately shows all vat rates applied in the invoice together with your vat no at the top. You will have to provide a breakdown of all vat paid and collected in your vat returns which will have to be filed periodically as needed by the hmrc vat department. If you have already paid vat on goods and services in another eu country then you can try for vat reclaim once you’re a certified vat registered trader.
Vat registration is a simple online process that needs to be done first if you want to turn into a vat registered trader in the United Kingdom. You can simply fill the web based vat registration form and submit it to the hmrc vat department whenever you make an application for registration for vat.