VAT applies to all of you as long as your sales of VAT-approved goods and services exceed the VAT threshold. This includes both purchases and sales to other parties, even if they are not VAT-registered. If you reach the VAT threshold in a year or be reasonably sure that you will meet this requirement in a year, you must register for VAT with the VAT Fund.
VAT-free Sale
The second type of VAT-free sale you can make in the UK is importing goods into the UK. However, certain rules apply to this activity. For example, you cannot enter the country with the intention of re-exporting goods. Also, if you engage in the importing of goods for personal or private use, then only those goods that are specifically purchased for consumption in the UK are eligible for importation into the UK.
Rates that Apply
Importers do not generally have to pay any VAT at the point of entry. However, the rates that apply to imported goods are different than those charged on domestic production. The rates that apply to imported goods are referred to as Value Added Tax. You will need to register your goods before you can receive any payment from the VAT authorities. If you do not register, your importer will be charged with VAT on the full market price of your goods, including any VAT that you may be liable to be billed.
Imports are Subject to Change
The rates that apply to imports are subject to change, which means that importers must keep records of previous years’ sales and inventories. Your records should include all relevant information about the types of goods that you sell, the amounts that you charge for each item, and the total number of sales and inventories that you make in a year. Importers must record all relevant information so that they can accurately calculate their annual VAT liability. If you plan to sell imported goods, then you must register those items immediately with the VAT authority. If you do not register the items on time, then you may face fines, or even be forced to withdraw from the UK.
Factors that Determine your VAT Taxable Turnover
Several other factors determine your VAT taxable turnover. Those factors include the location of your business, the number of goods that you sell each month, and the volume of business transactions that take place in your home country. Other items that are taken into account when calculating your VAT include the type of consumer that you deal with, whether your business is your own a partnership or an unincorporated firm. Most importantly, all firms that do business in the UK must register with the VAT authorities. If you fail to register with the VAT authorities, your firm will have to pay all applicable taxes and penalties.
Required to Register your Goods for Zero-Rated Consumption
If you are planning to purchase imported goods for personal consumption, or if you plan to undertake primary trading in the UK, then you may be required to register your goods for zero-rated consumption. Your zero-rated consumption charges are generally computed by taking the cost of importing the goods, less any customs duty that you might be required to pay, and multiplying this figure by the number of goods that you import every month. For example, if you import six hundred and fifty goods per annum, then you would calculate that you owe a charge of eleven hundred and thirty-one pounds per annum in the UK tax year. However, your account will show that you consumed zero-rated goods because the customs department marked them as such.
Register its Activities for Sales Tax Purposes
In addition to zero-rating items that are imported for personal consumption, your business might also be required to register its activities for sales tax purposes. Your sales tax invoice must state the manufacturer or importer of the goods, the sales price, the place where the goods are purchased from, and the sales tax rate. The quantity of the goods that you bought can also be specified on your sales tax invoice. The manufacturer’s address can usually be stated as being that of the business premises of the company, the business name, or the trade name of the company. The importer’s address can normally only be that of the commercial address of the exporting company, which is always the same as the address of the port of exit from the country where the goods are exported.
Conclusion
Another way of thinking about the meaning of zero-rating is that it relates only to goods that are sold, rather than services. Services are sold, whilst products are traded. Thus, anything that you sell is not taxable, provided that you do not sell more goods than you consume. This means that, for example, if you earn money by writing articles, you do not need to include the cost of articles that you buy with the profits that you make, as these are zero-rated purchases for VAT.
