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  uk vat registration

VAT UK registration is important as you do not get the advantage to charge or claim back VAT paid on any business purchase if you are not VAT registered.

As per the rule of UK Government it is mandatory for a person to be vat registered if he goes to set up a business in UK and business income surpasses £68 000.

A VAT registered business should maintain a detailed VAT account which includes the summary of output tax payable and input tax recoverable by the business. These records should be maintained for six years.

In the UK a company does not have to be VAT registered if it makes less that £64,000 ($120,000) per year. To facilitate the value of your assessable supplies (assessable supplies denotes any goods and services that are subject to VAT at any rate, including zero rate) in the earlier 12 months period or less has went over the existing VAT registration threshold of £68,000 (from 1st May 2009) or the value of your assessable supplies in the subsequently 30 days alone is supposed to surpass this threshold. This threshold will be applicable for 2009/10 tax year, and generally increases by £1,000 or so in every tax year. Even if your business turnover hasn't exceeded the current threshold, you can still apply to register for VAT voluntarily.

If you are VAT registered with one of the reasons mentioned above, but you are not a resident of UK or have a place of business here, then you have to register as a Non-Established Taxable Person (NETP). You may get the option to employ a tax agent to maintain VAT records and accounts on your behalf.

If you've crossed the threshold for the time being, and you express to HMRC that you will do business underneath the de-registration threshold of £66,000 in the longer term, you are liable to submit an application through a VAT registration form describing the proper reasons for exception from registration.

♦   If HMRC grant you an exemption for registration for the time you must inform them if your turnover surpasses the threshold again.
♦   If HMRC refused for the exemption you should be registered for VAT from the day you should have been registered. You must be accountable for
    VAT from that date.

The Isle of Man is considered as part of the UK for VAT purposes and VAT is chargeable in the Isle of Man (under Manx law which generally parallels UK legislation).

UK registration rules allow a company owner to fill in VAT 2 and VAT 1 forms correctly for making a valid application for refund. All the application should be sent to HMRC showing amounts of output tax to be accounted for and of deductible input tax together with other statistical information.
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In all cases a standard form should be filled up in the native language of the Member State in which the VAT was actually due. Besides a proof regarding supplied of eligibility should be provided (generally VAT registration in the home country). In general, should be prepared of the year through out a calendar years runs from 1 July to 30 June in which the VAT was charged

The time limit for filing a refund application to the United Kingdom for invoices dated from July 1, 2008 through June 30, 2009 is December 31, 2009 i.e within six months. All documents should be submitted before the closing date and some take time to order (such as supporting forms that have to be ordered from IRS).

As per new VAT rule commencing from January, 2010, UK business customers receiving cross border services after 1 January 2010 will be eligible for UK VAT on most services make available with their suppliers situated abroad under “reverse charge’ provisions”. Under this system the recipient itself will have to charge VAT on the value of services received. The supplier will no longer charge foreign VAT. UK businesses that deliver services to customers where the place of supply is the customer’s country must get the customers VAT registration number and will have quarterly reporting obligations.

In UK non-registered businesses from outside the EU also have the ability for reclaiming VAT which was incurred during their business activities. There exit some rules concerning what can be claimed and often restrictions where the home country of the applicant does not offer shared rights.

Typical Expenses which qualify VAT refunds 

VAT Rate                              

Recovery Restriction

Exhibitions/Trade Fairs 
Conferences/Workshops 
Meetings/Seminars 
Training Courses

15.00

NO

Advertising 
Marketing 
Sponsorship 
Research

15.00

NO

Print and Related Matters

00.00

NO

Stationary 
Delivery 
Postage

15.00

NO

Hotel/Accommodation

15.00

NO

Meals

15.00

YES

Car Rental

15.00

YES

Fuel

15.00

NO

Taxis

15.00

NO

Public Transport

00.00

N/A

Telephone Communication

15.00

NO

Professional Fees

15.00

NO

* VAT incurred on expenses related to business/client entertainment is not allowed to recover.
Please note that hotel and restaurant expenses of people traveling on business generally do not belong to business entertainments & recoverable.