UK VAT return

UK VAT return Having a business in the UK means that you should be geared and fully informed of all legalities and paperwork required. In addition to the UK, knowledge about doing business sin the European Union is also very important. Of course, if are a business owner, you will look at growing your business. After a particular level of growth, a UK VAT registration becomes mandatory and thus is need to be done. Understanding the workings of the UK VAT laws is also very important.

Voluntary registration for VAT is very necessary to keep up the goodwill of the company. VAT is a tax that is applicable to all companies that are involved in transactions involving the transfer of any goods and services. Once the company crosses a limit of turnover as stipulated by the VAT laws, it is liable to pay the VAT by filling in a VAT return to HM Revenue & Customs in the UK.

VAT consists of two components ? input tax charged and paid to the supplier on the basis of raw material or goods purchased and output tax calculated as a percentage of sales. The percentage however, depends upon the goods dealt in. The difference between these two taxes is the liability of the company as VAT payable to the HM revenue and customs. If the tax paid is more than the tax received, the company will receive a tax refund from the department.

The turnover levels for applicability of VAT registration is £64,000 in the previous 12 month period which means that if your company has sold goods above this value in the preceding 12 month period, VAT registration is mandatory. This also applies, if the company expects sales of more than £64,000 in the coming 30 days. This figure is flexible and is liable to change at the discretion of the government.

While the registration is mandatory, certain goods and services like the education, training and insurance are exempt from VAT. Registration with the UK VAT authorities also underlines certain regulations in accounting procedures which are mandatory and need to be followed. Not only in cases of the turnover exceeding certain levels, VAT is also applicable to certain products even if the turnover is negligible. However, as a good citizen, if you register for UK VAT voluntarily, you can receive certain benefits like reclaiming the VAT depending on the size of the business.

Many clients, especially the bigger ones prefer to deal with companies that have a VAT number since the purchase would offset their amounts payable through the UK VAT return. You can also have your company VAT registered online, or you could download forms and do the needful in the traditional method. Being on the right side of the government and keeping elite company with biggies will only result in more credibility to your company in the long run. Moreover, being on the right side of the law has never hurt anyone yet.

Mike Bern is the author of this article on vat return. Find more information about vat refund here.