If your business is growing quickly in a eu country that has adopted VAT then you should surely learn all about what is vat before you turn into a vat registered trader. Vat or value added tax is a system of collecting taxes on goods and services, and is a type of consumption tax since the final tax is paid by the end-consumer.
Most countries in the European Union have adopted vat so as to conduct business under a common tax umbrella. The European Commission that monitors vat and issues vat rules and directives has implemented vat in a bid to create a common market, and to stop tax leakages. However, each country that follows the system of vat such as Poland, Portugal, Austria, Germany, Spain, Italy, Greece, the UK, etc interpret eu vat rules in their own way while remaining within the set boundaries. All eu countries can also set their own vat rates within the specified vat bracket as indicated by the European Commission. For example, standard vat rates have to be in the range of 15% to 25%. However, most countries also have reduced vat rates while some also have goods and services that attract zero vat rates or are totally vat exempt.
If you are a trader in the UK then you will need to follow uk vat once you enter into the system of vat. However, in order to receive your own vat certificate with your vat number, you will need to turn into a vat registered trader. You can do so if your taxable sales touch the vat threshold limit of £70,000 or are expected to touch this figure within the next 30 days, or can even do so when you have just started a new business. Once your vat registration process is complete then you will need to issue vat invoices, file vat returns and can even file for vat refunds if vat has already been paid on goods and services before it is imported into the UK. However, since filing for vat reclaim is a cumbersome process you should hire a vat agent to handle refunds and in fact all your vat matters even as you try to learn more about what is vat with each passing day.
You will also need to learn all about various vat rates applicable on goods or services that you purchase and sell. In the UK, it is HM Revenue and Customs or hmrc that has slotted goods and services into 14,000 classifications. You will thus need to apply the correct rate of vat so as to safely follow all applicable vat rules. You will also need to choose an appropriate vat accounting method and file your vat returns based on the system that you have chosen. Hmrc vat offers several vat online services including vat registration, online vat returns and refunds, and you should certainly use them to save on time and money while also conducting all online vat procedures in a secure manner. You can also opt for vat training to learn all about vat.
Your business will certainly benefit if you have all required knowledge on vat before you incorporate this system in your business. Once you know all about what is vat then you will certainly be able to calculate vat rates accurately, issue vat invoices, file vat returns and get successful vat refunds without any problems.