Are you planning to start your business in the UK? It maybe the time for you to look at value-added tax (VAT) and how VAT Registration UK works.

VAT taxable turnover is simply the total money recovered from providing goods and services that are not exempted from the tax bracket in the UK. The tax bracket can be found by checking the compliance and rate site. Here are the points to note.

  • Every goods and service sold in the UK is entitled to VAT
  • Every company selling goods and services needs a UK VAT registration certificate.
  • VAT is only charged on the businesses that have gone over the threshold in 12 months or expect to reach the threshold in 30 days-time-a fine is charged for late payment.
  • The threshold is £85,000 of the VAT taxable turnover of any goods and services sold that are not exempted.
  • You need to register for VAT if you buy goods that are below or above £85,000 threshold from EU suppliers.
  • You have to register if you take over an already registered business for VAT.
  • If your business is done digitally and targeted to customers based in Europe, you are also entitled to pay for VAT registration certificate.
  • For foreign business with intention to trade or just started trading in the UK, you are expected to register for VAT within 30 days of such sale.
  • Any non-established business that uses local staff regardless of meeting the threshold or not will have to register for VAT.

How does VAT registration in UK work?

The registration for VAT is done by the HMRC non-establish taxable unit at their office in Scotland, Aberdeen, and 8 ruby houses, etc.

For international companies, the process is done online, and it is required that you own a UK bank account or have an agent that will be representing you. The necessary forms will have to be signed. For example, VAT1 is required to be filled with details of taxable goods and services, VAT1A for distance selling into the UK. After submission of the form, it usually takes four to six weeks for it to be processed and a VAT number will be assigned to you consisting of about nine numbers unique to the UK.

Also, registration of VAT can be transferred to someone buying a business but still wants to use the same VAT number. The seller and buyer will have to notify HMRC of such change for the online VAT account of the seller to be stopped and transferred to the buyer.

Any company can also cancel their VAT membership if they join a group or no longer meet the stipulated threshold over a period of time usually 30 days to avoid being penalised or they just stopped trading. The deactivation can also be done online with any of the above reason.

In a situation where your business was not charged for VAT after purchases and before registration, it is liable to be charged 4 previous years backdating to when it was registered and what the goods were used for. If it was a service rendered, backdating only goes as far as 6 months.

VAT registration UK is a simple process, but if in case you cannot handle it on your own, it is advisable to use the services of an accountant knowledgeable enough in tax matters and VAT to be precise.




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