If you have crossed the threshold limit or want 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 goods and services. Vat is thus followed even while trading between member eu countries. In case you have started a fresh business in the UK 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 this threshold limit is achieved if you sell your goods or services to mostly vat registered traders. Vat registration can be achieved as being an individual, partnership, company, trust, etc as deemed fit by the hmrc department.
However, as soon as you apply for vat registration then your costs could increase slightly, and when you sell your goods and services locally in the UK at a 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 enterprise activities only to remain outside the system of vat then this 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 since it will avoid the problem of double taxation by permitting you to reclaim vat already paid on services or goods overseas too.
The entire process for registration for vat is quite simple but if you aren’t sure about yourself then you 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 are able to make an application for vat using your vat agent too provided you inform the department of your choosing. As soon as 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 keep 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 that your clients can reclaim vat from their end.
As soon as your application is eligible then you will receive your distinct vat registration number and may have to display it on all vat documents as well as your vat invoices, vat returns, and vat refunds. You will also have 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 need to give a summary of all vat paid and collected within 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 products or services in another eu country then you can certainly try for vat reclaim once you’re an official vat registered trader.
Vat registration is a simple online process that has to be done first if you want to turn into a vat registered trader in the UK. You can easily fill the online vat registration form and submit it to the hmrc vat department when you apply for registration for vat.