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 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 as well as improve your business cash flow.
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. If 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 may also apply before this threshold limit is achieved if you sell your services or goods 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 make an application for vat registration then your costs could increase slightly, and if you sell your goods and services locally in the United Kingdom at a retail level then you could choose to remain outside of vat if you only sell vat exempt goods. However, if you try to artificially make an effort to separate your enterprise activities simply to remain outside the system of vat then the hmrc vat department might not take your actions lightly in case you are discovered doing the same. There are many advantages of entering the vat system since it will prevents 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 pretty simple but if you are not sure about yourself then you definitely should simply appoint a professional 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 make an application for vat using your vat agent too provided you inform the department of your choice. As soon as you apply for vat registration then this process of approving your application typically takes between 10 to 30 days. Until then you can keep issuing regular invoices to your clients. However, during that period you will need to take into account applicable vat rates and re-issue those invoices issued after your application so that your clients can reclaim vat from their end.
Once your application is approved you will receive your unique vat registration number and may need to display it on all vat documents including your vat invoices, vat returns, and vat refunds. You will also 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 need to give a breakdown of all vat paid and collected within your vat returns that will have 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 certainly try for vat reclaim once you are a certified vat registered trader.
Vat registration is a simple online procedure that needs to be done first if you want to turn into a vat registered trader in the United Kingdom. You can simply fill up the web based vat registration form and submit it to your hmrc vat department whenever you apply for registration for vat.