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

If you have a running business in the UK or plan to start one you then should know all about the rise in hmrc vat rates from 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 carry on running your business without any interruptions.

Much like other European countries, the UK too has embraced vat or value added tax as 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 you’ll be able to make an application for vat registration and turn into a vat registered dealer. This move will allow you to obtain a vat number that will need to be mentioned in each vat invoice which you issue to the 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 detail.

Currently, the United Kingdom has 3 vat rates as decided by the hm revenue and customs department or the hmrc. The standard vat rates are 17.5% that is slated to raise to 20% from January 4, 2011. You’ll thus need 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 lower vat rate of 5% is slated to remain similar to well as the zero vat rate. Vat exempt rates and classifications too are slated to remain vat verification the same. To be on the safe side, you should however, ask your vat agent or consultant to stay glued to all changes in uk vat as well as eu vat rules, particularly if you import services or goods from member EU countries that follow vat.

Come January 4, 2011 and the vat threshold limit, and also the flat rate vat scheme limit too might be changed to include the modification in standard vat rates. However, for those who have already paid vat on products or services abroad before these were imported to the UK then you’ll be in a position to request vat reclaim by filling out the requisite vat form. In case of any doubts you could visit the hmrc vat website whilst utilizing various vat online services offered by the department. Several other eu countries too have either raised or plan to raise vat rates in the near future as many countries had offered special rates to tide over the economic slowdown.

It is thus important that you clearly understand the implications of increased vat rates on your business before, during and following the alternation in vat rates. This should help you to file for your vat returns correctly while charging revised vat rates to your customers. You may anyway also disclose any errors that might have already been committed during the transition period to the hmrc department and even make necessary adjustments in your next vat return as specified by them.

The rise in standard vat rates from 17.5% to 20% from January 4, 2011 will lead to a marginal increase in costs. However, this change will also have to be reflected in coming vat returns and calculations. You should make an effort to be aware of everything about the increase in hmrc vat rates within the coming year so that your business carries a seamless transition to the New Year.