value added tax system

value added tax system

In place of customs (import) and excise (export) tax structures, an uncomplicated VAT, or Value Added Tax, was introduced. Under the new VAT rules, taxes are charged based on the value that is added to the particular country in the European Community. When goods are exported, the VAT is wholly or partially refunded to the purchaser. The department that now oversees the finances, including customs and excise VAT collection and refunds is the HM Revenue and Customs, also known as HMRC.

Many business owners in the UK and European community are required to register as a VAT business. You are required to register with HMRC if the value of your goods and services are subject to a VAT rate (nearly everything is) and your sales exceed £70,000 annually; or you purchase supplies from another VAT registered business and intend to export the goods; or you purchase or take over a business already VAT registered and intend to continue its operation.

You are not required to collect VAT or register with HMRC if you are primarily a distance seller, sending your goods to countries outside the European community and your annual turnover does not exceed £70,000 per year. Acquisitions below £61,000 annually are permitted without VAT registration.

VAT exemptions do exist, however, strict regulations do apply. If you believe your business is VAT exempt, you must still complete a VAT registration form.

If you are a manufacturer creating taxable supplies in the UK or EC, you should complete form VAT 1. Distance merchants need form VAT 1A. If you are primarily an acquisitions dealer, you need form VAT 1B. Form VAT 1C is for manufacturers of relevant supplies, as set forth by HMRC. Form VAT 2 is for partnership businesses. VAT 68 is for those that purchase an existing business and plan to keep the existing VAT number. You can appoint a tax representative using form VAT 1TR.

Jack Shepard writes for Accordance VAT, an international Tax consultants, specialising in EU VAT . Accordance VAT offer a unique cross border tax consulting pratice, by providing one central contact for all your international VATcompliance queries. Please visit Accordance VAT For more information about EU VAT and other international tax compliance issues. Article Source: http://EzineArticles.com/?expert=Jack_Shepard

value added tax system

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