- Overview of UK VAT System: The UK has established an independent VAT system post-Brexit, diverging from EU regulations. Businesses must comply with UK VAT separately and cannot use EU schemes like OSS and IOSS for sales to UK customers.
- Making Tax Digital (MTD): Since April 1, 2019, all VAT-registered businesses with a turnover over £85,000 are required to maintain digital records and submit VAT returns using HMRC-recognized software, with penalties for non-compliance.
- VAT Registration Requirements: Businesses must register for VAT if their taxable turnover exceeds £90,000 in the past 12 months or is expected to exceed this threshold within 30 days. Non-UK businesses must also register if they store goods in the UK or make taxable supplies.
- Compliance Process: To ensure VAT compliance, businesses need to register for VAT, select the correct VAT rate, submit quarterly returns, and regularly check the validity of their VAT number to avoid penalties.
- Penalties for Non-Compliance: Late submission or payment of VAT can lead to significant penalties, including point penalties for late returns and fixed daily penalties for overdue payments. Businesses are advised to stay organized and file on time to avoid financial losses.
Source VATai
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