If you have crossed the threshold limit or wish to become 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 turn into a vat registered trader then you will be empowered to reclaim vat paid in another eu country and thereby lower your costs as well as improve your business earnings.
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 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 services or goods to mostly vat registered traders. Vat registration can be achieved as 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 products or services locally in the UK at a retail level then you could choose to remain outside vat if you only sell vat exempt goods. However, if you try to artificially make an effort to separate your business activities simply to remain away from system of vat then the hmrc vat department might not take your actions lightly in case you are discovered doing precisely the same. There are many benefits of entering the vat system as it will avoid the problem of double taxation by allowing you to definitely reclaim vat already paid on services or goods overseas too.
The entire process for registration for vat is pretty simple however, if you are not sure about yourself then you definitely should simply appoint a professional 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. Once you make an application for vat registration then this 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, 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 other end.
As soon as your application is eligible then 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 the invoice together with your vat no at the top. You will have to provide a summary of all vat paid and collected in your vat returns which 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 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 the hmrc vat department when you apply for registration for vat.