In case 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 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 like the UK, Spain, Poland, Sweden, Italy, Germany, etc have moved over to vat for taxing goods and services. Vat is thus followed whilst 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 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 can even apply before this 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 apply 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 should you only sell vat exempt goods. However, if you try to artificially try to separate your business activities only to remain away from system of vat then the hmrc vat department may not take your actions lightly in case you are discovered doing the same. There are several advantages of entering the vat system since it will avoid the problem of double taxation by permitting you to reclaim vat already paid on services or goods overseas too.
The whole process for registration for vat is quite simple however, if you are not 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 are able to 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 process of approving your 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 need to factor in applicable vat rates and re-issue those invoices issued after the application so that your clients can reclaim vat from their end.
As soon as 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 need to give a breakdown of all vat paid and collected within your vat returns which will have to be filed periodically as required by the hmrc vat department. If you have already paid vat on goods and services in another eu country then you can certainly apply for vat reclaim once you are a certified vat registered trader.
Vat registration is a straightforward online process that needs to be done first if you wish to turn into a vat registered trader in the United Kingdom. You can easily fill the web based vat registration form and submit it to the hmrc vat department whenever you make an application for registration for vat.