In case you have a running business in the UK or intend to start one then you ought to know all about the rise in hmrc vat rates in the coming year. This will help you to quickly incorporate all of the necessary changes in your vat invoices and vat returns, and help you to carry on running your enterprise without any interruptions.
Just like other Countries in Europe, the UK too has embraced vat or value added tax to be a system for avoiding double taxation on goods and reducing tax leaks. If your current taxable sales exceed £70,000 pounds in the past Yr you’ll be able to make an application for vat registration and turn a vat registered dealer. This move will enable you to obtain a vat number which will have to be mentioned in each vat invoice that you issue to your customers. This vat invoice will also have to mention the vat rate charged and your vat returns too will need to mention all applicable vat rates and amounts in greater detail.
Currently, the UK has 3 vat rates as decided by the hm revenue and customs department or hmrc. The regular vat rates are 17.5% that is slated to raise to 20% from January 4, 2011. You will thus have to issue tax invoices with the new standard rates from January 4, 2011 onwards and also file your vat return based on the new vat rates. The lower vat rate of 5% is slated to remain similar to well as the zero vat rate. Vat exempt rates and classifications too are slated to stay vatverification the same. To be on the safe side, you should however, ask your vat agent or consultant to remain glued to any or all alterations in uk vat as well as eu vat rules, especially if you import services or goods from member EU countries that follow vat.
Come January 4, 2011 and the vat threshold limit, and the flat rate vat scheme limit too might be changed to include the modification in standard vat rates. However, for those who have already paid vat on goods and services in another country before they were imported into the UK then you will be able to ask for vat reclaim by completing the requisite vat form. In case of any doubts you can always go to the hmrc vat website while also utilizing various vat online services provided by the department. Other eu countries too have either raised or plan to raise vat rates in the near future as numerous countries had offered special rates to tide over the economic slowdown.
It is thus important that you clearly comprehend the implications of increased vat rates on your own business before, during and following the change in vat rates. This should help you to file your vat returns correctly while also charging revised vat rates to your customers. You may anyway also disclose any errors that might have already been committed during the transition period to the hmrc department and also make necessary adjustments in your next vat return as specified by them.
The increase in standard vat rates from 17.5% to 20% from January 4, 2011 will result in a marginal rise in costs. However, this variation will also have to be reflected in coming vat returns and calculations. You should make it a point to be aware of all about the rise in hmrc vat rates in the coming year so your business has a seamless transition to the New Year.