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. When you finally are a vat registered trader then you will be empowered to reclaim vat paid in another eu country and thereby decrease your costs as well as 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 definitely make an application for vat registration with the HM Revenue and Customs or hmrc department. You can even apply before threshold limit is achieved if you sell your goods or services to mostly vat registered traders. Vat registration can be done 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 when you sell your goods and services locally in the United Kingdom 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 simply to remain outside the system of vat then the hmrc vat department may not take your actions lightly in case you are discovered doing the same. There are many advantages of entering the vat system since it will avoid the problem of double taxation by allowing you to definitely reclaim vat already paid on goods or services overseas too.
The entire process for registration for vat is pretty simple however, 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 apply for vat through your vat agent too provided you inform the department of your choosing. Once you make an application for vat registration then the procedure for approving your application typically takes between 10 to 30 days. Fo the time being you can continue issuing regular invoices to your clients. However, in that period you will need to factor in applicable vat rates and re-issue those invoices issued after the application so that your clients can reclaim vat from other end.
As soon as your application is approved you will receive your distinct vat registration number and can need to display it on all vat documents including your vat invoices, vat returns, and vat refunds. You will probably need 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 within 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 goods and services in another eu country then you can certainly try for vat reclaim once you are an official 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 UK. You can easily fill the web based vat registration form and submit it to your hmrc vat department whenever you make an application for registration for vat.