In case 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 make an application 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 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 goods and services. Vat is thus followed even while trading between member eu countries. In case you have started a fresh business in the UK and also have touched ?70,000 pounds in taxable sales during the past 1 year then you can definitely 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 an individual, partnership, company, trust, etc as deemed fit by the hmrc department.
However, once you make an application for vat registration your costs could increase slightly, and if you sell your goods and services locally in the United Kingdom at the retail level then you could opt to remain outside of vat should you only sell vat exempt goods. However, if you try to artificially try to separate your business activities simply 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 many benefits of entering the vat system as it will prevents the problem of double taxation by permitting you to definitely reclaim vat already paid on services or goods overseas too.
The whole process for registration for vat is quite simple but if you are not sure about yourself then you should simply appoint a professional vat agent to handle 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 using your vat agent too provided you inform the department of your choosing. As soon as you make an application for vat registration then this procedure for approving the application usually 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.
Once your application is eligible you will receive your distinct vat registration number and can have to display it on all vat documents as well as 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 that invoice along with your vat no at the top. You will have to provide a summary of all vat paid and collected in your vat returns that will have to be filed periodically as required by the hmrc vat department. In case you have already paid vat on goods and services in another eu country then you can try for vat reclaim once you are a certified vat registered trader.
Vat registration is a simple online process that needs to be done first if you wish to turn into a vat registered trader in the United Kingdom. You can simply fill up the web based vat registration form and submit it to the hmrc vat department whenever you make an application for registration for vat.