If you have a running business in the UK or plan to start one you then ought to know everything about the rise in hmrc vat rates from the coming year. This should help you to quickly incorporate all of the necessary modifications to your vat invoices and vat returns, and enable you to keep on running your enterprise without any interruptions vat verification.
Much like other European countries, the United Kingdom too has embraced vat or value added tax to be a system for avoiding double taxation on goods and reducing tax leaks. If your current taxable sales exceed £70,000 pounds in the past 12 months then you can make an application for vat registration and turn a vat registered dealer. This move will allow you to receive a vat number which will have to be mentioned in each vat invoice that you issue to the customers. This vat invoice will also have to mention 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 need to issue tax invoices using the new standard rates from January 4, 2011 onwards as well as file your vat return in line with the new vat rates. The lower vat rate of 5% is slated to remain the same as well as the zero vat rate. Vat exempt rates and classifications too are slated to stay the same. To be secure and safe, you need to however, ask your vat agent or consultant to remain glued to any or all changes in uk vat in addition to eu vat rules, especially if you import services or goods 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 will be changed to incorporate the modification in standard vat rates. However, in case you have already paid vat on goods and services in another country before these were imported to the UK then you will be able to ask for vat reclaim by filling out the requisite vat form. In case of any doubts you could go to the hmrc vat website while also utilizing various vat online services provided by the department. Several other eu countries too have either raised or intend to raise vat rates in the future as numerous countries had offered special rates to tide over the economic slowdown.
It’s thus important that you clearly comprehend the implications of increased vat rates on your business before, during and after the alternation in vat rates. This will help you to file for your vat returns correctly while also charging revised vat rates to the customers. You may anyway also disclose any errors that may have already been committed during the transition period to the hmrc department and even make necessary adjustments in your next vat return as specified by them get more info.
The rise in standard vat rates from 17.5% to 20% from January 4, 2011 will lead to a marginal increase in costs. However, this variation will also have to be reflected in coming vat returns and calculations. You should make an effort 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.