Focus on increasing your sales by opting for vat flat rate scheme

If you are a trader in the UK with taxable sales of less than £150,000 then instead of getting bogged down while maintaining vat accounts in detail you should focus on increasing your sales by opting for vat flat rate scheme. This scheme allows you to charge a flat percentage of vat to your clients without the need to maintain detailed vat accounts.

Under standard vat accounting procedure you would need to pay vat to your suppliers and charge vat to your clients. Each vat invoice issued by you would also require you to show the vat rates and vat amount while the same would need to be shown in great detail in your vat return. However, if you are on the verge of breaking through the vat threshold limit of £70,000 in taxable sales within the past 12 months and you do not wish to get entangled in maintaining tedious vat accounts then opting for the flat rate scheme would be the best option.

Although you would be required to display the vat rate in your invoice, you would not be required to maintain a detailed account of how much vat you have charged on every single invoice. You would only need to submit your total taxable sales in the required period and pay a flat rate of vat over that amount. In addition, if you directly opt for the flat vat rate scheme in the first year of vat registration then you would also be entitled to a special discount of one percent from HM Revenue and Customs or hmrc vat department that collects vat from all vat registered traders and implements uk vat rules.

However, you can enjoy these benefits only until your sales touch £225,000 after which you will be compelled to exit this scheme and join any other applicable vat scheme. All these thresholds are slated to change from January 4, 2011, when standard rates of vat all across the UK increase from 17.5% to 20%. If, however, you have tried out this scheme in the previous 12 months or are part of a group or division, or have been convicted or charged for any vat offence then you will not be eligible for the vat flat rate scheme. There are also certain other factors that can compel you to remain outside this scheme.

While you can avoid maintaining vat accounts in great detail and also get a one percent discount to join the flat rate scheme, you will certainly lose out on revenue if you generally purchase standard rate goods or services as this scheme will not allow you to opt for vat refunds. If your turnover consists mostly of zero vat rate or VAT exempt sales then again this scheme is not suitable for your business. If you have normally received vat repayments while following the standard vat rate scheme then this too could stop once you switch over to the flat vat scheme. You should consult your vat agent and weigh all existing and future facts before you enter or shift into this scheme.

If you do not expect your business to rise rapidly in the near future then you should opt for a vat accounting scheme that is easy to maintain and takes up least amount of time and energy from your business. You should check all facts related to the vat flat rate scheme and opt for the same if both you and your vat agent come to the same conclusion that such a scheme is indeed right for your business model.

In matters of tax eu countries have mostly opted for vat

Introduced first in France in 1954, VAT or value added tax was slowly implemented in most European countries in the coming years and in matters of tax eu countries have mostly opted for vat. VAT is a taxation system that bypasses the perils of double taxation while also ensuring better adherence to tax payments.

Most countries around the globe usually depended on traditional sales tax systems as a means of collecting revenues through taxes. However, the system was not perfect and goods as well as services were taxed multiple times under this system. Vat is applicable every-time specified goods or services change hands and vat registered traders simply get back the paid tax amount when they issue a vat invoice to their clients and collect the tax back. Regular vat returns ensure that traders provide all vat details to their respective vat departments.

Most eu countries including Denmark, Greece, Sweden, France, Italy, Poland, Germany, Spain, Ireland, Hungary, the UK, Portugal, and Austria, among others have opted to remain with vat while other countries around the globe too have shifted to this method of collecting taxes on goods and services. Although vat rules differ slightly in various countries, most of them do remain similar in principle to other countries even though vat rates on similar items might differ.

Most eu countries including the UK have 3 basic vat rates that are charged whenever goods or services are sold. The standard rate of vat is what is usually charged on most goods and services, and these range between 15-25%. Other goods and services fall into the reduced vat rate of 1-5%, while a few others fall into the zero vat rate category. There are also certain vat exempt goods and services where no vat is charged and no vat can be claimed either. Each country has its own vat rate classifications where thousands of goods and services are segregated according to their vat rates.

Traders that want to follow the vat system need to turn into vat registered traders in their own country. This can be achieved by crossing the vat threshold limit set by their country. In this vat tax eu countries too have various threshold limits and traders might need to appoint a vat agent with good knowledge of eu vat and uk vat rules, especially if they import goods or services from member eu countries into the UK. Once a trader gets vat registration then the business will need to issue vat invoices mentioning vat rates clearly as well as file regular vat returns. However, any vat paid in another country could be claimed back by a trader by opting for vat refunds, which in turn would help avoid double taxation and provide a cash flow boost to the trader’s business.

Vat has been openly welcomed by most eu countries including the UK, and traders can quickly understand the system once they turn into vat registered traders. An expert vat agent on hand can also guide them during calculations and filing of vat returns so as to reclaim any previously paid vat. In matters of tax eu countries have mostly opted for vat and this unified system has helped many traders in such countries to quickly recover previously paid taxes.

While reclaiming vat ensure proper procedures are followed

If you have already paid vat on your goods or services more than once and want to receive the original amount back then while reclaiming vat ensure proper procedures are followed. You can use the vat refund scheme to get back vat that might already have been paid earlier so as to reduce your costs as well as get relief from the problem of double taxation over your goods or services.

Although you will not be allowed to deduct the VAT tax amount directly from your next vat return, you will still be allowed to claim that amount in a separate vat refund scheme. This scheme is available in the UK subject to certain terms and conditions. Most eu countries that follow vat usually have such procedures where vat amounts that have already been paid can be reclaimed. If you are a vat registered trader in the UK that does not have vat registration in the country of origin then you can claim any vat paid in that country provided you meet a few other vat rules.

You can also claim vat paid in another eu country if you have not got relief through any other vat scheme. You will need to use a standard vat reclaiming form through the HM revenue and customs or hmrc vat website that looks after the customs, excise and vat department in the UK. On the other hand, since the reclaiming rules might differ in other countries, you might need the services of an expert vat agent well-versed in uk vat and eu vat rules to successfully extract vat refunds from the relevant country. Your agent can act on your behalf once you provide them with a power of attorney or a letter or authority to do so.

You can go in for a vat reclaim no later than 9 months in a calendar year after you have paid the vat amount. You will first need to register your business name and your agent’s name too in case you plan on reclaiming vat through your agent. You should use the hm vat refunds service that is a part of the vat online services offered by the hmrc vat website so as to save on time and effort. Once you submit the required online vat form you will be issued an online reference number that will indicate that your request has been received by the vat refund department.

Although you will not need to send any paper documents, certain eu countries might ask for a scanned vat invoice to be attached to your vat refund request. Once you have sent your reclaiming request hmrc will send you a confirmation regarding the same within 15 days while the concerned eu country will normally provide you with a vat refund within 4 months, if all your documents are in proper order. In case any further information is required from that eu country then you can expect your vat reclaim to be settled after around 8 months of the original application.

In order to avoid the problem of double taxation, most eu countries that have adopted vat including the UK offer vat refunds that can be claimed by following proper procedures and using proper applications. You too can claim back vat paid in any other eu country that follows vat by reclaiming vat back from that eu country when you use the vat refund scheme.

Pay your customs duties and vat dutifully to hm customs vat

If your trading or manufacturing business requires importing goods into the UK then you should pay your customs duties and vat dutifully to hm customs VAT. The customs department is managed by hmrc or hm revenue and customs department which is responsible for collecting various duties and taxes while also managing several benefits and funds.

Hmrc was established in the year 2005 with the merger of hm customs and excise department with the inland revenue department. This department now collects duties such as customs duties, excise duties, import vat, sales vat, income tax, inheritance tax, corporation tax, capital gains tax and several other taxes. The hm customs vat department collects around £17 billion in the form of duties and taxes each year.

If your business involves importing goods from other countries including member eu states that have also implemented the system of vat or value added tax then there are several advantages that can be beneficial for your own business. However, these benefits can be booked only if you too are a vat registered trader in the UK. A systematic understanding or uk vat and eu vat rules will help you to reclaim any vat that might have been paid on any goods in the country of origin before being imported into the UK.

You will be charged customs duties by the hm customs department upon entry into the UK. If you import alcohol or tobacco products or engage in providing gambling services then you might have to pay excise duties. The duties or import vat that you pay will depend on the nature of the goods or services imported into the UK and the hmrc uses a database of 14,000 classifications to slot your imports into the relevant classification.

Once your vat registration is completed then you can sell your imported goods in the local market by charging the appropriate vat on those products or services. You will also need to file regular vat returns and could file for vat refunds for vat paid in the country of origin. This applies to vat already paid on products or on services utilized in another eu country. For example, if you have paid vat while taking part in a trade show in another country then you can claim the amount back.

The hm customs vat department also allows you to pay most of your taxes online while also allowing you to calculate customs and excise duties, and vat by providing online help. On your part, you should definitely go in for the services of an expert customs and vat agent for seamless imports of goods and services into the UK as well as for ensuring that your imports are all classified and paid for in the correct manner. The customs, excise, and vat department does not take kindly to mistakes or fraud, and you might find yourself in deep trouble in case you knowingly or unknowingly commit any errors.

If you plan to import goods or services into the UK then you need to ensure that you employ professionals that have complete knowledge on customs, excise and vat rules pertaining not only to the UK but also to the entire EU region. This will help you to calculate and pay your customs duties and vat dutifully to hm customs vat so as to run your business without any setbacks.