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. Once you are a vat registered trader then you will be empowered to reclaim vat paid in another eu country and thereby decrease 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 whilst trading between member eu countries. If 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 may also apply before this threshold limit is achieved if you sell your services or goods 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 make an application for vat registration then your costs could increase slightly, and when you sell your goods and services locally in the UK at a retail level then you could opt to remain outside of 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 might 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 avoid the problem of double taxation by permitting you to definitely reclaim vat already paid on services or goods in another country too.
The entire process for registration for vat is pretty simple but if you aren’t sure about yourself then you 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 are able to 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 the process of approving the application typically takes between 10 to 30 days. Fo the time being you can continue issuing regular invoices to your clients. However, during that period you will need to take into account 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 then you will receive your unique 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 probably need to issue a vat invoice that separately shows all vat rates applied in the invoice together with your vat no at the very top. You will have to provide a breakdown of all vat paid and collected within your vat returns which will have to be filed periodically as needed by the hmrc vat department. If you have already paid vat on products or services in another eu country then you can certainly apply for vat reclaim once you’re a certified vat registered trader.
Vat registration is a straightforward online process that needs to be done first if you want to turn into a vat registered trader in the UK. You can easily fill the online vat registration form and submit it to your hmrc vat department when you apply for registration for vat.