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Crossing over the vat threshold limit takes you into the world of vat

If you are a trader in a eu country that follows the system of VAT or value added tax then crossing over the vat threshold limit will take you into the world of vat. If your business is located in the UK then once your taxable sales touch £70,000, which is the threshold limit or if you expect to touch that limit in the coming 30 days, then you will need to apply for vat registration immediately.

The threshold limit is the minimum amount of taxable sales that qualifies you to register for vat. Your business might also cross over this threshold limit in case you take over an existing business and the combined taxable sales of your existing and new business go over £70,000. However, Her Majesty’s Revenue and Customs or hmrc that looks after all aspects of vat tax in the UK also allows you an option of turning into a vat registered trader even if you have just started a new business and have not touched the threshold limit. This could be helpful for your new business in case you do not sell goods or services to end-customers but instead to other traders or companies that need to continue the chain of vat and reclaim vat paid to you.

Several other eu countries too have followed the system of vat in a bid to block tax leaks and increase revenues. The European Commission that oversees vat all over Europe has issued eu vat rules that form the basis of vat in each eu country that levies vat on goods and services purchased and sold in that country. Each country also has its own vat threshold limit that allows businesses to enter into the vat system. Once a business gets vat registration from the appropriate vat department of that country then the business also gets its own vat number along with the country code that needs to be displayed on each vat invoice, vat return and vat refund application.

It is quite easy to turn into a vat registered trader in the UK since hmrc offers online vat registration forms that can be downloaded and even submitted online if you are the sole owner of your business. You could be asked to submit additional details and might receive your vat registration and vat certificate within 30 days of submitting your application. Once you turn into a vat registered trader then you will also need to follow all other uk vat rules like filing regular vat returns and following proper procedure. You can also file for vat reclaim if you have already paid vat on goods and services in another country. However, if you only deal in vat exempt goods or services then you need not turn into a vat registered trader or in case you can satisfy hmrc that your business is not used for vat purposes. A competent vat agent would be able to guide you on whether you need to apply for vat while also guiding you in case you do need to register for vat.

If you are a trader in the UK that needs to become a part of the vat chain then you can do so whenever you desire. However, if you do manage to cross over the vat threshold limit of £70,000 in taxable sales then it is mandatory for you to register for vat and turn into a vat registered trader.

Public services benefit from collections of hm revenue & customs

When you import goods or services into the UK or even sell them in the UK market then you need to pay duties and taxes since public services benefit from collections of hm revenue & customs. This department collects almost around 17 billion pounds every year as taxes and duties which are then spent on strengthening public services in the country.

When you import goods or services to resell in local markets or re-export out of the UK, you will need to pay customs duties or excise duties or import VAT on the same. Even if you import capital goods for your manufacturing unit or import spares for your machinery, you will still need to pay appropriate duties. When you sell your goods or services and earn profits on the same then you also need to pay income tax or capital gains tax on those earnings. All these taxes and duties need to be managed by an agency and the money collected has to reach back to the public in the form of vital funds, and it is precisely for this purpose that the hm revenue & customs was created.

The merger of the Customs and Excise Department with the Inland Revenue Department in 2005 led to the creation of the HM Revenue and Customs Department. Since the UK has adopted vat or value added tax along with several other eu countries such as Spain, Sweden, Italy, Germany, Greece, Hungary, Poland, among others, the vat chain will continue even when you imports goods or services from these countries. Thus, although you will certainly need to pay the appropriate customs or excise duties or even import vat on your imports, any vat paid before the goods reached UK shores could be claimed back from the original country.

However, you can enjoy all benefits of vat only when you are a vat registered trader in the UK. You can also get vat registration in other countries as a foreign country depending on their vat rules. You can now apply for vat refunds for vat already paid in the original country. You will also need to charge sales vat to your local customers by mentioning the exact vat rate and amount in your vat invoice. You will also need to file your vat returns to the revenue department at prescribed intervals.

On its part, the hm revenue & customs department not only collects various duties and taxes such as customs and excise duties, vat, income tax, capital gains tax, inheritance tax, corporation tax, stamp duty land tax, etc but also manages pensions, child benefit and child trust funds. This department also administers border and frontier protection, national minimum wage enforcement and manages environmental taxes. In short, the money paid by the public in the form of taxes and duties ultimately reaches back to the public.

You will certainly need to pay all your duties and taxes to the relevant departments while also maintaining a detailed record of the same. However, in case you are a vat registered trader then this will also allow you to track and claim back vat refunds so as to prevent double taxation and lower your costs. Anyway, if you pay your due duties and taxes on time then it is public services that will benefit from collections of hm revenue & customs.

Getting vat help at the right time can help save a lot of money and effort

If you are a new entrant to the world of vat or value added tax then it can be intimidating at first and getting vat help at the right time can help save a lot of money and effort in the long run. There are various avenues that can provide you with timely help so that you can quickly settle down to paying and collecting vat and also filing vat returns without any problems.

If you are on the verge of turning into a vat registered trader in the UK after reaching the vat threshold limit of £70,000 in taxable sales then you will need to know all about what is vat so that your transition is not marred by mistakes that could derail your business. In these lightning-fast times, the best help can be found over the internet so as to study all vat rules that pertain to your business. In addition, hiring an expert vat agent or consultant is a must if you want to remain on the right side of HM Revenue and Customs or hmrc that handles vat in the UK, Northern Ireland and the Isle of Man.

The best vat help can be found on the hmrc vat website itself where you can learn all about implementing vat into your business. You can learn on how to apply for vat registration, calculate vat rates, collect and pay vat, issue vat invoices, maintain a vat register, file vat returns and also apply for VAT refunds for vat already paid on goods and services. In addition, there are several online forums that can also help you understand particular queries that you might have. Your vat agent too can guide you in case you are at a loss to understand certain aspects of vat. Other eu countries that follow vat also have their own help versions in their own languages.

The hmrc website offers much more than help topics on vat since it also allows you to fill up certain vat forms online while allowing you to download others. You can also file online vat returns with the help of your vat agent, which in turn will help save precious time and effort. If you are importing goods or have utilized services in any eu country that has adopted vat and have paid vat for the same, then you can also file for a vat reclaim in the country of origin. In such a case you can get help from your vat agent that might follow up on your vat refund for a percentage of that vat tax amount. Since vat refunds usually take between 4 to 8 months to materialize, timely help from an experienced vat agent can help you focus on your business while you agent follows up on the vat refund and makes sure that the tax amount is deposited in your bank account.

Learning various vat rules on uk vat and eu vat can seem to be a frightening prospect but you can explore various types of help provided through books and the internet too. Your vat agent too can help you out to a great extent although it would surely help if you learnt the basics of vat so as to know your standing at all times. Certainly, getting vat help at the right time can help save a lot of money and effort, and also prevent you from making any mistakes in collecting vat or filing vat returns, which could be looked at with suspicion from hmrc vat department.

Pay taxes on goods and services as per vat act 1994

Although the United Kingdom adopted the practice of vat or value added tax in 1973, the country’s traders now pay taxes on goods and services as per vat act 1994. The act puts several vat rules and regulations into place for efficient tax collection on taxable sales made in the UK.

The 1994 VAT act explains the meaning of value added tax on goods and services, specifies applications and exclusions for this tax as well as puts down a system of collecting and paying those taxes to Her Majesty’s Revenue and Customs Department or the hmrc. The act specifies that goods that are imported into the UK with the aim of selling them again are subject to vat. This tax is slotted in 3 different vat rates. Although the vat act was established in 1994, the vat rates have changed over the years. Several eu countries such as Germany, Sweden, Spain, Poland, Italy, Greece, etc have also implemented their own version of the vat act that is quite similar in principle, although their vat rates too differ according to their classifications.

Vat rates in the UK are broadly based in 3 slabs. The standard vat rate in 2010 was 17.5% but is all set to increase to 20% from January 4, 2011. The reduced vat rate is 5% and there are also certain goods and services related to foods, children, hospitals, etc that attract zero vat rate or are vat exempt. The vat act 1994 also specifies on how a trader in the UK can join the vat system by turning into a vat registered trader. Currently, once a trader achieves a vat threshold limit of £70K in taxable sales then that trader can apply for vat registration, although that move can be made before reaching the limit too.

The vat act also specifies the format of a vat invoice and the details that a vat registered trader needs to incorporate within that invoice. A trader will need to display the vat number, vat rate and total vat amount in each vat invoice. The trader will also need to file vat returns at the intervals specified by hmrc vat. The beauty of vat is that if any trader has imported goods or services into the UK after paying vat on the same in another eu country then that vat amount can be claimed back with an appropriate vat refund application.

Each eu country has similar rules based on their interpretation of the vat act. Although the language might be different, most rules are still the same. For example, traders in Poland need to issue a faktura invoice, which is the same as a vat invoice, except that it is issued in the Polish language. Most traders do end up hiring vat agents that have a thorough knowledge on eu vat and uk vat rules along with complete knowledge of the vat act and its amendments so as to efficiently calculate and pay vat, file returns and claim vat refunds.

The vat act was introduced to lay down the provisions of following the system of vat in the UK. Several other countries too have now switched over to vat as a way of collecting taxes on goods and services. In the UK, however, traders need to pay taxes on goods and services as per vat act 1994 while also paying heed to regular changes in the act.

Make a vat application for vat registration and vat refunds

If you plan to sell goods or services in the UK then you might soon need to turn into a VAT registered trader and to achieve it you will need to make a vat application for vat registration and vat refunds in the future. It is however, important that you get your application right the first time around for seamless integration into the vat tax system.

The UK along with most of the eu countries have shifted over to vat or value added tax for taxing goods and services sold in their respective countries or even re-exported out of those countries. If your trading business deals at a very small scale to individual end-users then you might not need to register for vat since this will allow you to keep your costs at a lower level. However, once your sales touch the vat threshold limit of 70,000 sterling pounds within the previous 12 months or if you feel that this figure could be achieved in the coming 30 days then you will have to apply for vat registration.

In the UK all vat rules are issued and managed by Her Majesty’s Revenue and Customs department or hmrc. If your sales have reached the vat threshold limit or if you feel that you need to issue vat invoices to all your clients then you should make an application for vat certification to the hmrc. You can easily do so by making an online application, especially if you are an individual running your own business. You can simply fill up a vat form known as VAT 1 online and submit it online to hmrc vat department. In case your business is a partnership, a company, a trust, a charity, or any other type of organization then you can download the applicable vat application form but will need to print it out at your end, fill it up and dispatch it physically to hmrc.

If the hmrc vat department does not have any additional queries upon receiving your application then you can expect your vat certificate to arrive within one month. Thus, if you want to receive your vat registration without any hiccups then you should hire a vat agent that has expertise in uk vat and even eu vat systems so that there is complete adherence to all vat rules. Your vat agent can also guide you during filing of vat returns.

If you import goods or services from other eu countries that have already charged you vat on the same then you will again need to make a vat refund application to recover that double-taxed amount. Again, your vat agent would be able to make the necessary vat applications for vat refunds within the stipulated time. This will help redirect vital funds back into your business. Since all applications related to vat usually are of time-bound nature, it is important that you file them well within the stipulated time frame.

If you want to charge vat to your clients then you will need to apply for vat registration to the hmrc as soon as your business becomes eligible for such a move. You should enrol the help of an expert vat agent so that your vat application is approved instantly and your vat registration and future vat refunds are awarded without any problems.