Value added tax (VAT) is a tax which is applied to almost every product and services of the company in the UK. VAT is a tax which is collected by the business or individual on behalf of HM revenue and customs (HMRC). It is applied on each step involved in the production of a good.
The United Kingdom VAT regime was introduced as a part of the UK’s admission in the European Union in 1973. This regime was based on the European Union (EU) VAT laws which are also known as the EU VAT Directives. These laws are implemented in the UK legislation as the Value Added tax Act. This act sets the rules for VAT registration, returns, compliance, EC sales list, intrastate and other related issues in the UK. These laws address the way in which the companies can get their UK VAT number if it is importing, exporting or selling goods in the UK.
The UK VAT act is operated by the HM revenue and customs (HMRC). Any company which is involved in any sales of products or goods in UK is responsible to account for the UK VAT. This means that the company should follow all the compliance and operational obligations according to the act. There are many limited situations in which a foreign company needs a UK VAT Number which provides its services in the UK.
Registration for UK VAT number:
There are certain situations in which you have to get a UK VAT umber if you are a foreign company. These situations include:
- The import or export of goods into Europe via the UK.
- Involvement in distance selling i.e. selling goods to the customers in the UK through the internet.
- Buying or selling goods within the UK.
- Managing and organizing live events or exhibitions with paid for admission on the door for your products and services.
- The self-supply of goods.
- Holding or storing goods as a consignment in the UK, prior to onwards sale outside the UK or other business.
- If your company is a non-VAT trader but it is receiving services under the reverse charge rule in the UK.
The process of getting a UK VAT number will require at least one month. This is only an average time. Some companies need to wait for a longer period. According to HMRC, the companies who are waiting for registration number should charge VAT on their invoices. Instead, they should increase the amount for their products by 20%, which is the current VAT rate. They should also inform the customers that the new invoices will be provided to them after the completion of the registration process. According to the UK VAT act, many of the foreign companies are not required to get their UK VAT number if they are providing their products and services in the UK. It is also in accordance with the European supply rules.