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 apply for registration for vat to turn into a vat registered trader. Once you turn into a vat registered trader you will then 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 products or services. Vat is thus followed whilst trading between member eu countries. If you have started a fresh business in the United Kingdom and also have touched ?70,000 pounds in taxable sales during the past 1 year then you can definitely apply 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 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 when you sell your products or services locally in the United Kingdom at the retail level then you could choose to remain outside of vat should you only sell vat exempt goods. However, if you try to artificially make an effort to separate your business 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 several 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 whole process for registration for vat is quite simple however, if you aren’t sure about yourself then you definitely 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 can make an application for vat through your vat agent too provided you inform the department of your choice. As soon as you make an application for vat registration then the process of approving the application usually takes between 10 to 30 days. Until then you can continue issuing regular invoices to your clients. However, during 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 then you will receive your distinct vat registration number and may 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 that invoice along with your vat no at the top. You will have to provide a breakdown of all vat paid and collected in your vat returns which will need to be filed periodically as needed by the hmrc vat department. In case you have already paid vat on goods and services in another eu country then you can try for vat reclaim once you’re an official vat registered trader.
Vat registration is a straightforward online process 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 your hmrc vat department when you apply for registration for vat.