If 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 apply 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 as well as enhance your business cash flow.
Several eu countries like 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 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 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 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 products or services locally in the UK at the retail level then you may opt to remain outside of vat if you only sell vat exempt goods. However, if you try to artificially try to separate your enterprise activities simply to remain away from system of vat then this hmrc vat department may not take your actions lightly in case you are discovered doing precisely the same. There are many advantages of entering the vat system since it will prevents the problem of double taxation by allowing you to reclaim vat already paid on services or goods overseas too.
The whole process for registration for vat is pretty simple but if you are not sure about yourself then you definitely 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 apply for vat through your vat agent too provided you inform the department of your choice. Once you make an application for vat registration then the procedure for approving your application usually 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 take into account applicable vat rates and re-issue those invoices issued after the application so your clients can reclaim vat from other end.
Once your application is eligible you will receive your distinct vat registration number and can have 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 give 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. If you have already paid vat on products or services in another eu country then you can apply for vat reclaim once you are a certified vat registered trader.
Vat registration is a simple 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 web based vat registration form and submit it to your hmrc vat department when you make an application for registration for vat.