Decipher customs and excise vat duties to improve your earnings

Your profit margins could be severely impacted if you fail to factor in important levies that contribute to the cost of your products and this makes it critical for you to decipher customs and excise vat duties to improve your earnings. If you want to start a trading or manufacturing business in any EU State then it is vital that you understand the importance of various duties when you import and sell your goods.

If you want to start importing goods and services into your country then you will need to pay customs duties, excise duties, or import vat on those products or services depending on the classification under which they fall. If your business is located in the UK and you plan to import goods from other EU States such as Poland, Sweden, Germany, etc then a thorough knowledge of uk vat is necessary when you start selling your goods in the local market. If your goods or services have already incurred eu vat in their home countries before you import it to the UK then you can apply for vat reclaim in those countries so as to lower your product costs and prevent double taxation.

In the UK, it is the hm customs and excise department that handles all matters related to customs and excise vat on products and services imported and sold within the country. Most commercial products fall in any one of the 14,000 classifications specified by the customs division while most tobacco and alcohol products will attract excise duties. Many products also attract import vat while being imported into the UK. Most products also attract sales vat or value added tax when they are sold locally and it is the hm revenue and customs department that will be tracking your sales. Once your sales cross over the vat threshold limit of over £70,000 in the past 12 months then you may need to get vat registered.

Vat registration will not only allow you to charge vat to your clients in your vat invoice but also allow you to claim for a vat refund if you have already paid vat in the country of origin before importing it to the UK. An experienced customs, excise and vat agent or consultant should be employed so that all your imports and vat returns are handled efficiently. There are several products that attract lower import duties and vat rates, while some are also vat exempt. You can surely lower your product costs by slotting them in the correct category as well as claiming vat refunds well before the time limit.

Failure to pay heed to the importance of customs and excise vat duties could prove to be fatal for your business. You will not only end up with higher product costs but in case you end up causing losses to the vat customs and excise department then you could be booked for fraudulently importing or selling goods or services in the UK or even in the country of origin. You could also lose out on a legitimate vat refund if you are not conversant with the latest vat rules.

When running a business, it is important to allow professionals to guide you, especially when the job involves lowering your costs legally and dealing with important government departments. It is very important that you tie up with an efficient customs and excise vat consultant or agency that offers all import and vat services under one roof so as to improve your business bottom line.

Check for zero rated vat goods and services related to your business

If you do not want to pay higher vat rates by mistake or want your goods and services to remain at optimum costs then you should check for zero rated vat goods and services related to your business. There are different vat rate slabs that are applicable on various goods and services, and you should make an effort to check the classifications that are applicable to your business.

Most eu countries have shifted over to the system of vat or value added tax over the years in a bid to trade within a common market. These countries have different vat rate slabs such as standard vat rates that are between 15% and 25%. Most countries also have reduced vat rates on certain goods and services such as goods for children, fuel, etc. Some countries such as the UK also have zero vat rates on certain goods and services, and you can apply for vat reclaim on such goods and services in case vat was previously paid on them before they turned into zero rated ones. Finally, some goods and services are also vat exempt and it would be quite difficult to get vat refunds on them.

In the UK there are several zero rated vat goods and services such as goods sold during charitable fund-raising events and advertising events related to the same. Even selling donated goods for charity or constructing or selling a building for charitable purposes attracts zero vat rates. In addition, most services, equipments and buildings specifically required for disabled people attract zero vat rates. Several utilities related to water and sewerage too attracts zero rates. Leasing, hiring or selling of freight containers too fall in this category. Several repair and maintenance services related to ships, planes, helicopters and military airplanes also fall under the zero rated vat categories. Printing of brochures, pamphlets and leaflets for your business also attract zero vat rates. In addition, clothing for children along with newspapers, magazines, publications, maps, charts, and books all attract zero vat rates in the UK.

You will certainly need to understand the concept of filing for vat refunds even on zero vat rates goods and services. For example, while paper might attract a particular vat rate, books are zero rated and thus you might be able to apply for vat reclaim in case vat has been paid before a particular product changed into a zero rated one. You should certainly hire the services of a competent vat agent or accountant, especially if you deal in some of these goods or services that attract zero vat rates. You will also need to choose an appropriate vat accounting scheme depending on the vat rates normally applicable on your business. You can also visit the website of HM Revenue and Customs or hmrc vat to learn about various vat classifications so as to find out all about applicable vat rates on goods and services purchased and sold in the course of your business.

Some countries such as the UK have a list of goods and services that do attract zero percentage of vat but are still under the purview of vat. If you are a vat registered trader in the UK then you should surely check for zero rated vat goods and services related to your business so as to adhere to vat rules while also claiming vat back successfully.

Embrace convenience and safety by filing your vat return online

Upon turning into a vat registered trader you will need to file regular vat returns and you should definitely embrace convenience and safety by filing your vat return online. Most vat departments in the European Union including the UK encourage vat registered traders to file their returns online in a bid to do away with paper returns.

If you had applied for vat registration on or after April 1, 2010 then you would have to anyway file vat returns online irrespective of your turnover. However, if you have registered before that date then you would need to file online returns only after your taxable sales touch £100,000 excluding vat. Until then you would be allowed to manually file your vat returns. However, you would still have an option to file your returns online if you do wish to do so.

The vat return form has several boxes that all need to be filled up depending on the vat accounting scheme that you have chosen. The frequency of your returns will also depend on your turnover and accounting scheme although most dealers fall in the quarterly returns section. Your vat return will inform HM Revenue and Customs or hmrc vat department that looks after vat matters in the UK, all about the vat collected and paid within the specified period. This data includes the amount of vat that you have charged to your clients and the amount that you need to pay to hmrc or claim back from hmrc depending on your vat purchases. In case you have imported goods into the UK or sold goods outside the UK then those amounts also need to be summarized in your vat return.

You will also need to mention your vat number in your vat return while also mentioning it in each vat invoice and vat refund application too. Before you can file your vat return online or authorize your vat agent to do so on your behalf, you will first need to register for vat online services at the hmrc website while also mentioning if your vat agent will be filing the vat returns on your behalf. Once you get the proper authorization then you will now be able to save time, money and effort by simply filing your returns online and also by using other online services offered by hmrc. You can now focus on running your business instead of worrying about delayed or lost vat returns or wasting precious time in filling out vat returns on paper.

Most other eu countries including Sweden, Germany, etc already accept electronic vat returns and other countries too are trying hard to eliminate paper returns. You should certainly opt for online returns since it offers convenience since your vat agent can now file your return on a 24/7 basis. The returns will also remain safe since you will be operating in a secured hmrc website. You can also use a number of options while paying the difference in vat to hmrc, such as direct debit, online banking, phone banking, etc.

You need not be a computer or internet expert if you want to shift over to online filing of vat returns. Hmrc allows you to use dial up connections too and you can now easily embrace convenience and safety by filing your vat return online without worrying about whether your returns are delayed or lost in transit.

For successful vat refund uk vat rules need to be followed

If you do not want to end up paying vat twice on goods imported into the UK or on official services utilized in another eu country then you should apply for a refund of vat while remembering that for successful vat refund uk vat rules need to be followed. You will have to follow rules set up by Her Majesty’s Revenue and Customs department or hmrc while reclaiming previously paid vat.

All eu countries that follow vat need to implement eu vat directives that are issued by the European Commission. The hmrc interprets the basic rules issued by the EC and implements them to all vat registered businesses in the UK, Northern Ireland, and the Isle of Man. If you are a trader with vat registration in any of these regions then you will need to follow specific rules to successfully receive the earlier amount of vat back into your account. If your business requires you to import goods from other eu countries where vat is levied or have participated in conferences, workshops, or trade-shows in such countries along with your employees then you might have been charged vat in those countries.

However, you might also have to pay input vat when the goods are imported in the UK. Any vat that you pay in a eu country might eat into your profits if you do not claim it back. In such a case, you should try for a vat uk refund to avoid getting taxed twice. From January 1, 2010 onwards all vat refund claims in the UK have to be made online as per EC directives. You should first register at hmrc vat website so as to gain access to all vat online services offered by them. Once you have registered with hmrc then you can fill up the applicable online vat form or enlist the help of a competent vat agent that can also register and act on your behalf.

Since vat refunds take at least 4 months to materialize and even 8 months if hmrc or the country of origin where vat was originally paid, responds with additional questions then you might have a difficult time in monitoring each application individually. In such a case, your vat agent could monitor each vat reclaim application and claim a portion of the vat amount that is returned back to you by hmrc as fees. This would free you from paying any fees upfront as well as help you to forget about chasing each refund on your own.

You will also need to store each vat invoice or vat receipt that indicates vat paid for goods or services in another vat enabled eu country. These documents will need to be presented with your vat reclaim application so that the corresponding eu country can process your vat reclaim application and transfer the amount in their currency in case of a successful outcome. You can then convert the amount in GB Pounds before you plough it back into your business. Regular reclaims will surely help improve the bottom-line of your business while bringing about a smile on the face of your vat agent at the same time.

The system of vat tax empowers you to apply for vat refunds in case vat has been paid twice over the same goods or services. If you are a vat registered trader running a business in the UK then for successful vat refund uk vat rules need to be followed and you can visit the hmrc website to learn more while empowering your vat agent to recover all previous double-tax payments.

Apply for vat reclaim to get back previously paid vat

Vat or value added tax does away with the problem of double taxation on goods and services, and it is precisely for this reason that you should apply for vat reclaim to get back previously paid vat. If your business is located in the UK and you have paid vat in another eu country that follows vat then you can still claim the original vat amount back from that country by following proper vat norms.

Most eu countries including Italy, Greece, Poland, Sweden, Germany, Portugal, etc have embraced vat as a system to provide taxes to their governments. However, if you are a vat registered trader that imports goods into the UK or take part in trade shows in various eu countries then you might end up paying vat on goods and services much before they touch the shores of your country. On the other hand, you might also pay vat for goods or services that might have been used for your business and you can also reclaim vat paid on them.

In case you have imported goods into the UK where vat has previously been paid in another eu country then you need to follow a slightly lengthy process for reclaiming vat. It will certainly help if you let your vat agent file the online application to hmrc or Her Majesty’s Revenue and Customs department for reclaiming the amount already paid in another country. You will need to attach file attachments to your online application containing the original vat invoice issued in that country that specifies the amount of vat paid against those goods or services.

In turn, hmrc will forward your vat application to the applicable country that might even ask for your original vat certificate to prove authenticity of your vat refund claim. If all your documents manage to convince hmrc vat and the vat department of the concerned country then you can expect your vat reclaim to reward you with the desired amount within 4 months of filing your claim, otherwise you will need to wait for 8 months in case any additional details are required. The money that arrives in your bank account will also be in the currency of the country of origin and you will need to convert it to GBP before you can withdraw it. You will also have a period of 9 months after the completion of the calendar year before you can make an application for reclaiming vat.

However, instead of getting diverted from your business to track the status of your vat reclaim applications, you should simply let your vat agent handle all related paperwork until the claim is realized. Most vat agents work on a commission basis on the amount of the reclaim and will take their cut only when you receive the money. This will free you of any financial burden while providing your business with a cash injection whenever a claim materializes into your bank account.

By following vat in the UK, you have the option of lowering your business costs by recovering any vat amount already paid on goods or services. This is especially useful when you import high-value goods into the UK where vat has already been paid in the country of origin or utilize services in a foreign eu country while paying vat for the same in that country. You can now apply for vat reclaim to get back previously paid vat and breathe a sign of relief every time that vat amount returns back into your bank account.

Study vat on food rates if you plan to enter the food industry

If you plan to trade in food products in the UK or make delicious food dishes including pastries or ice creams to sell, then you will surely need to study vat on food rates if you plan to enter the food industry. Vat or value added tax has been adopted in the UK just like in many eu countries and knowing all about applicable vat rates on food will help you earn better profit margins, file proper vat refunds and also remain on the correct side of the vat law in the UK.

The hmrc or HM Revenue and Customs department that looks after all vat related issues in the UK, Northern Ireland and the Isle of Man, has around 14,000 vat classifications on goods and services that attract various rates of vat. Included within them are various foods including ingredients, and processed and finished foods that are fit for human consumption. You should make it a point to study all these classifications in great detail so that you can place your product in the correct vat slot without any problem in the future. In the UK there are 3 vat rates that cover most products including foods. The first is the standard vat rate of 17.5% that is set to rise to 20% from January 4, 2011. The second is reduced vat rate of 5%, while the third is zero vat rate. Certain goods and services also fall within the vat exempt classification where claiming vat back is quite difficult.

Most foods and food products sold in the UK fall in the standard and zero vat rate. For example, most ingredients used in cooking such as meats of various animals, fishes, vegetables, fruits, cereals, pulses, and even juices fall in the zero vat rate category. Even other ingredients used for cooking food such as cooking oils, salt, starch, sweeteners, flavoring mixes, and several other food additives fall in the zero vat category. If you supply frozen meals or sandwiches to grocery stores then these too are zero rated. However, if you supply sandwiches as part of catering services or supply ice creams, ice lollies, powders or mixes for making ice creams or even frozen yogurt that needs to remain frozen then you will have to charge standard vat rates. Similarly certain types of cakes, biscuits and chocolates fall under zero vat while other forms of the same fall under the standard vat rate.

It would be a better idea to hire an experienced vat agent that is well conversant with uk vat rules related to food products and even eu vat rules if you plan to import food products into the UK before selling them to your clients. You can also refer to notice number 701/14 of May 2002 posted on the hmrc vat website for further details on vat applicable on foods and drinks. It is best to start out in the food industry with complete knowledge on the applicable vat structure on all your foods so that you remain free from any vat audit in the coming days.

The food industry in the UK is huge and so are the vat classifications that change as soon as any food ingredient undergoes even minor changes. It is thus extremely important that you study vat on food rates if you plan to enter the food industry in the UK or any other eu country that follows the system of vat.

Each vat invoice should follow the specified format

Once you have climbed on the vat or value added tax bandwagon then each vat invoice issued by you should follow the specified format laid down by the relevant vat department. Most countries in the European Union have adopted vat and although languages vary in different countries, the basic format of this tax invoice is still the same.

Several eu countries have joined the system of vat in a bid to make cross-border transactions easier, increase tax revenues and stop tax leakages that were rampant in the old tax system. Countries like Sweden, Germany, Romania, France, Italy, the UK, Poland, Portugal, etc have clearly understood the advantage of shifting over to vat and have implemented eu vat rules in their own country. Each vat registered trader in his or her country needs to issue vat invoices against taxable sales. For example, a trader in Poland will issue a faktura invoice, which is the tax invoice version in Polish language. Similarly, if your business is located in the UK then you will have to issue an invoice that clearly specifies that you are a vat registered trader charging vat in the UK.

Your invoice should clearly mention your business name along with your business address. It should also mention the serial number of the invoice that should be in sequence with earlier ones. Your vat number should certainly be mentioned in each invoice. You will also have to clearly mention the net rate of any product or service that you have sold to your client along with the applicable vat rate next to it. You will finally need to mention the gross amount of the invoice that includes all vat rates and the final vat amount applicable on that invoice. This format will have to be used if you follow the standard vat accounting system. If, however, you follow the flat vat rate accounting system then your invoice format will be different.

In the UK it is Her Majesty’s Revenue and Customs or hmrc department that issues guidelines on customs, excise and vat matters. You can visit the hmrc vat website to look over the invoice format that will need to be implemented once you turn into a vat registered trader. You will also need to follow all uk vat rules issued by hmrc. On the basis of the invoices that you have issued, you will also need to file regular vat returns.

When you purchase goods or services from another vat registered trader within or outside of the UK, then again you will simply see a similar vat invoice with all required details mentioned within it. This format is very important since if you do need to apply for vat refunds for vat already paid on goods and services that could even be imported from another eu country then your purchase invoice would clearly need to mention the vat rates against those goods or services.

A vat registered trader needs to follow a specific vat accounting system that also includes issuing of special invoices that clearly specify the amount of vat being collected. You too will need to follow the system prescribed by hmrc when you issue a vat invoice for goods or services sold in the course of your business.

Get the right vat formula for calculating various vat rates

With most European countries shifting over to vat or value added tax for collecting tax on goods and services it is important that you get the right vat formula for calculating various vat rates. For example, if you are a vat registered trader in the UK that has also embraced vat then calculating correct vat rates is imperative while making a vat invoice, filing vat returns or even when applying for vat refunds.

All matters related to vat, customs and excise duties in the UK are handled by Her Majesty’s Revenue and Customs department or hmrc. This department has ushered all types of goods and services into around 14,000 classifications that fall into various vat rates. While some goods and services fall into the standard vat rate of 17.5% that will increase to 20% after January 4, 2011, others fall into the reduced vat rate of 5%. Still others, related to children, hospitals or gambling fall into the zero rate or vat exempt category while a few simply fall outside the vat net.

Thus, you will firstly need to know the classification of a particular product or service under which your vat rates fall before you can apply the corresponding vat formula. For example if you are selling a coat for £100 pounds exclusive of vat then you will need to calculate the amount of vat to be charged on the coat. If the coat attracts standard vat rates then you will need to calculate 17.5% over the basic rate and then add the vat rate to come up with the gross rate. In this case, you vat rate would be £17.50 being 17.5% over £100 and the total of your vat invoice will be £117.50. However, you might also need to calculate the amount of vat from any amount that displays a vat inclusive rate, especially when you file your vat returns where you will be required to show vat rates separately.

Thus, your formula for the same example as above would be to take the vat inclusive amount, i.e. £117.50 and divide it by 1.175, which in turn will give you the vat exclusive price of £100 and the vat amount as £17.50, which is the remainder of vat inclusive price minus the vat exclusive price. However, this formula of 1.175 will change from January 4, 2011 onwards when the standard vat rates rise and the formula to calculate vat rates on reduced vat goods and services too will be different.

You can easily ask your vat agent to provide you with the correct formula to calculate vat or even visit the internet where you can download vat calculators for various eu countries including the UK. In addition, your vat agent should also be an expert in uk vat and eu vat rates so that all your vat returns and vat refunds too are filed only with the help of correct formulae. You can also visit the hmrc vat website to learn more about calculating vat rates as well as to use various other online vat services offered by hmrc to make your life easier.

Vat is a very simple method of paying and collecting taxes although you first need to get the hang of calculating vat rates correctly and quickly before you can become comfortable within the system. You should ensure that you get the right vat formula for calculating various vat rates so that your vat invoices, vat returns and vat reclaims remain within the boundaries of vat rules.

Knowing about vat exempt goods and services can save a lot of money

If you are a trader, a manufacturer or any other organization including a charitable one in a eu country that has adopted vat then knowing about vat exempt goods and services can save a lot of money. If you are located in the UK then there are several goods and services that are exempt from collecting or paying any vat and you should keep an eye out on any exemption that affects your business or organization if you want to save money and remain on the right side of vat rules.

The UK has three vat rates roughly similar to most other eu countries that follow vat. The standard rate of vat in the UK is 17.5% followed by the reduced vat rate of 5%. Finally some goods and services attract zero vat rates while certain goods and services usually related to socio-economic sectors are exempt from any vat. The difference between zero vat and vat exemption is that while you can claim any vat previously paid on zero vat goods and service, it is usually not possible to go in for vat refunds on vat exempt goods and services, although there are a few exceptions. In the UK, it is HM Revenue and Customs or hmrc vat department that handles all issues related to vat and you will need to check on their 14,000 classifications to find out if any goods or services related to your business or organization falls under the exempt category.

For example, most betting activities in the UK including online and actual lottery sales are exempt from vat while so are bingo games, pool and games of chance. Sales of antiques or works of art too are exempt from vat. Most activities related to charity are also exempt although a few activities fall under the zero vat rate. Similarly, many medical services are exempt although some medical goods fall under the zero or reduced vat rate. Most education services along with parking garages also fall under the exempt category although books and magazines fall under the zero vat categories. Most insurance services along with select financial services are also vat exempt. Many public utility services including electricity, gas and heating oil attract reduced vat rates.

You should visit the hmrc vat website to look at the complete list of exemptions and should also hire a competent vat agent that has complete knowledge on uk vat as well as eu vat classifications so as to learn all about exempt goods and services. This would become even more crucial if you import or export goods or services that jump from one classification to another after manufacturing. For example while raw paper might attract a particular rate of vat, a finished book might fall under the zero vat category. In such a case, you could be entitled to a vat refund on vat paid on raw materials to lower your costs. If you are part of a charitable organization then although organizing a particular number of events in a year might be exempt from vat, certain types of income generated from that charitable event might not be exempt from vat.

All eu countries including the UK that follow vat usually have certain goods and services that are exempt from paying or collecting any vat. You should take all efforts to know all about vat exempt goods and services, and also about vat reclaiming rules so as to save money while remaining on the right side of the law.

In vat europe leads the way

Several countries around the globe have adopted vat or value added tax in a bid to increase tax revenues and the US too is thinking about adopting this system of collecting tax but in vat europe leads the way. Most European countries follow the system of vat and even have a common eu vat system that is to be followed by all member countries that have adopted vat.

European countries that have embraced vat include Poland, Germany, Spain, Greece, Sweden, the UK, Ireland, Portugal, Romania, and many more. Each european country requires traders to turn into vat registered traders before they can receive a vat certificate and issue vat invoices. Once a trader gets vat registration then the business also needs to account for input and output vat through regular vat returns that need to be filed at the required intervals based on the chosen vat scheme in that country.

The Eurpoean Commission or Europa monitors the overall implementation of vat in all vat enabled countries and has also issued various directives that guide member countries towards better integration in implementing vat. These directives also helps vat traders to apply for and receive vat refunds for vat already paid in another eu country. Each country also has its own version of vat invoice that still requires traders to display the vat rate, vat amount and total gross amount, although some countries are allowed to issue invoices in their own language. For example, in Poland, vat registered traders issue a faktura invoice, which is basically the same as a vat invoice issued by a similar trader in the UK, albeit in a different language.

While each country implements vat by following the common vat code, it also allows traders to go in for vat refunds on imported goods and services where vat has already been paid in the country of origin. With such rules of vat europe has made it easier for traders to avoid the problem of double taxation and recover the money from a member eu country within a period of 4 to 8 months. Most traders in vat enabled countries do employ a vat agent or consultant to help them calculate vat rates, file vat returns regularly, and apply for vat reclaim on their behalf. This enables them to pursue sales while leaving the taxation side to vat experts.

The European Commission has also instructed member countries to set standard vat rates between 15 to 25% while also trying to make them to arrive at a consensus in reduced vat rates as well as zero vat rates and vat exempt goods and services to reduce discrepancies between member countries. Several countries have also raised or are on the verge of raising vat rates in the coming year that were either lowered during the recession or simply in a bid to increase revenues.

Although vat has been slowly gaining popularity around the globe, the European Commission has ensured that their large flock of vat enabled European countries slowly gets in tune with each other as they try to follow a common code of vat. In vat europe truly leads the way in showing other countries as to how to successfully implement a common system of vat across geographical borders.