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

In case you have a running business in the UK or intend to start one you then ought to know everything about the rise 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 carry on running your enterprise without interruptions.

Just like other Countries in Europe, the United Kingdom 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 during the past Yr then you can 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 have to be mentioned in each vat invoice that you issue to your customers. This vat invoice may also have to mention the vat rate charged and your vat returns too will have to mention all applicable vat rates and amounts in 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 raise to 20% from January 4, 2011. You’ll thus need to issue tax invoices using 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 remain similar to well as the zero vat rate. Vat exempt rates and classifications too are slated to stay the same. In order to be on the safe side, you need to however, ask your vat agent or consultant to stay glued to all changes in uk vat in addition to 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, for those who have already paid vat on products or services in another country before they were imported into the UK then you’ll still be able to ask for vat reclaim by filling out the requisite vat form. In the case of any doubts you can always 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 future as many countries had offered special rates to tide over the economic recession.

It is thus essential that you clearly comprehend the implications of increased vat rates on your business before, during and following the alternation 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 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 rise 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 be reflected in coming vat returns and calculations. You need to make it a point to know everything about the rise in hmrc vat rates within the coming year so your business carries a seamless transition to the New Year.