If you have a running business in the UK or intend to start one then you ought to know all about the increase in hmrc vat rates in the coming year. This will help you to quickly incorporate all of the necessary modifications to your vat invoices and vat returns, and enable you to carry on running your enterprise without any interruptions vat registration.
Much like other Countries in Europe, the United Kingdom too has embraced vat or value added tax as a system for avoiding double taxation on goods and reducing tax leaks. In case your current taxable sales exceed £70,000 pounds during the past 12 months you’ll be able to make an application for vat registration and turn a vat registered dealer. This move will allow you to obtain a vat number which will have to be mentioned in each vat invoice that you issue to your customers. This vat invoice will also have to say the vat rate charged as well as your vat returns too will have to mention all applicable vat rates and amounts in greater detail.
Currently, the United Kingdom has 3 vat rates as decided by the hm revenue and customs department or hmrc. The regular vat rate is 17.5% that is slated to raise to 20% from January 4, 2011. You will thus have to issue tax invoices with the new standard rates from January 4, 2011 onwards as well as file your vat return in line with the new vat rates. The reduced vat rate of 5% is slated to stay similar to well as the zero vat rate. Vat exempt rates and classifications too are slated to stay the same. To be secure and safe, you should however, ask your vat agent or consultant to stay glued to all changes in uk vat in addition to eu vat rules, particularly if you import goods or services from member EU countries that follow vat.
Come January 4, 2011 and the vat threshold limit, and also the flat rate vat scheme limit too might be changed to incorporate the modification in standard vat rates. However, in case you have already paid vat on products or services in another country before these were imported to the UK then you will still be in a position to ask for vat reclaim by completing the requisite vat form. In case of any doubts you could visit the hmrc vat website while also utilizing various vat online services offered by the department. Several other eu countries too have either raised or plan to raise vat rates in the future as numerous countries had offered special rates to tide over the economic recession.
It is thus important that you clearly comprehend the implications of increased vat rates on your own business before, during and after the alternation in vat rates. This should help you to file your vat returns correctly while charging revised vat rates to your customers. You may anyway also disclose any errors that might have already been committed during the transition period to the hmrc department and also make necessary adjustments within your next vat return as per them more bonuses.
The increase in standard vat rates from 17.5% to 20% from January 4, 2011 will lead to a marginal increase in costs. However, this variation may also have to be reflected in coming vat returns and calculations. You need to make it a point to know all about the increase in hmrc vat rates within the coming year so your business carries a seamless transition to the New Year.