Know all about the rise in hmrc vat rates in the coming year

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

Much like most other Countries in Europe, the United Kingdom 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 then you can apply for vat registration and turn into a vat registered dealer. This move will allow you to obtain a vat number which will need to be mentioned in each vat invoice which you issue to the customers. This vat invoice will also have to say the vat rate charged as well as your vat returns too will have 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 hmrc. The standard vat rate is 17.5% which is slated to increase to 20% from January 4, 2011. You’ll thus need to issue tax invoices with the new standard rates from January 4, 2011 onwards and also file your vat return in line with the new vat rates. The reduced 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 the same. In order to be secure and safe, you should however, ask your vat agent or consultant to remain glued to all alterations in uk vat as well as eu vat rules, particularly 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 might be changed to incorporate the change in standard vat rates. However, in case you have already paid vat on goods and services in another country before these were imported to the UK then you’ll still be in a position to ask for vat reclaim by completing 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 numerous countries had offered special rates to tide over the economic recession.

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 your vat returns correctly while also charging revised vat rates to the customers. You may anyway also disclose any errors that might have already been committed through the transition period to the hmrc department and also make necessary adjustments within your next vat return as specified by them.

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