If you are a trader in the UK or any other EU country that has adopted VAT or value added tax as a method of collecting taxes then for selling to vat registered traders it makes sense to register for vat. You will be able to pass on vat benefits to your customers while also being able to reclaim vat that might have previously been paid in another country.
In the UK you can register as a vat registered trader irrespective of whether you are an individual running a business, a partnership, a club, a company, an association, or any other type of organisation. Basically, if you are dealing in goods or services that attract vat then you can get registered for vat. In addition, if most of your customers are vat registered dealers then it definitely makes sense for you to continue the vat tax chain and turn into a vat registered dealer.
If your taxable sales cross over the vat threshold limit of £70,000 in the previous 12 months then you are eligible for vat registration. However, you can also volunteer to get registered for vat before crossing the threshold limit too. Vat is an efficient method of taxing goods and services so as to avoid the problem of double taxation as well as bring about transparency in the tax system. If you are planning to import goods or services into the UK and then sell them locally then you can also apply for vat refunds once you turn into an official vat registered trader. You will need to apply to the HM revenue and customs department or the hmrc department, which in turn will forward your refund application to the concerned eu country.
Once you register for vat with the hmrc department and turn into an official vat registered dealer then you will need to issue a vat invoice that has been specified by hmrc. You will need to mention your vat number, vat rate and vat amount on the invoice. UK has 3 types of vat rates with the standard rates at 17.5%, reduced vat rates at 5% and zero vat rates. Some goods and services with a social impact are also vat exempt. You will first need to check as to which vat rate applies to each product or service before you start issuing vat invoices and start charging the applicable rates.
The vat rules in different eu countries that have adopted vat are slightly different and if you plan to import goods from such countries then you need to know much more than simply what is vat. An expert vat agent with sufficient knowledge of customs and excise duties that also knows all about uk vat and eu vat rules should be hired for smooth import of goods and services into the UK. Once you turn into a vat registered dealer then you will also have to file vat returns at the hmrc specified periods. If you deal in vat exempted goods then you will not be able to claim any vat refunds.
The hmrc offers vat registered dealers a chance to file their vat returns online itself. Your agent can also file the return on your behalf. However, before you become a part of the vat cycle you need to first register for vat so that you too can enjoy all tax benefits offered by this tax system.