Know everything about the rise in hmrc vat rates from the coming year

In case you have a running business in the UK or plan to start one you then ought to know everything about the increase in hmrc vat rates in the coming year. This should help you to quickly incorporate all the necessary changes in your vat invoices and vat returns, and help you to keep on running your enterprise without interruptions.

Just like most other European countries, the UK 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 Yr then you can make an application for vat registration and turn into a vat registered dealer. This move will enable you to obtain a vat number which will need to be mentioned in each vat invoice that you issue to your customers. This vat invoice may also have to say the vat rate charged as well as your vat returns too will need to mention all applicable vat rates and amounts in greater detail.

Currently, the UK has 3 vat rates as decided by the hm revenue and customs department or the hmrc. The regular vat rates are 17.5% that is slated to increase to 20% from January 4, 2011. You will thus have to issue tax invoices with the new standard rates from January 4, 2011 onwards as well as file your vat return in line with the new vat rates. The reduced vat rate of 5% is slated to stay similar to well as the zero vat rate. Vat exempt rates and classifications too are slated to remain the same. In order to be secure and safe, you need to however, ask your vat agent or consultant to remain glued to all alterations in uk vat in addition to eu vat rules, especially if you import goods or services from member EU countries that follow vat.

Come January 4, 2011 and the vat threshold limit, and the flat rate vat scheme limit too will be changed to incorporate the change in standard vat rates. However, for those who have already paid vat on goods and services abroad before they were imported to the UK then you will be in a position to ask for vat reclaim by completing the requisite vat form. In case of any doubts you can always visit 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 near future as numerous countries had offered special rates to tide over the economic slowdown.

It’s thus essential that you clearly understand the implications of increased vat rates on your business before, during and after the change in vat rates. This will help you to file for your vat returns correctly while also charging revised vat rates to the customers. You can anyway also disclose any errors that may have been committed through the transition period to the hmrc department and also make necessary adjustments in your next vat return as specified by them.

The increase in standard vat rates from 17.5% to 20% from January 4, 2011 will result in a marginal rise in costs. However, this change may also have to get reflected in coming vat returns and calculations. You should make an effort to know all about the rise in hmrc vat rates within the coming year so that your business has a seamless transition into the New Year.