Considered as a tax identity, VAT actually exists in many other countries and represents a certain percent of the service or good value. Any service or good that is locally produced or imported from different countries has to add this UK tax. Different English company types are presented with three taxes categories applicable to certain businesses. These taxes are divided in:
The standard VAT that represents 17.5 percents of product value being applicable to most services and goods;
The standard VAT presenting a tax reduction of maximum 5 percent that is usually applicable on power, fuel and dwelling (especially in women’s sanitary items, charitable institutions and homes consumption);
The “zero” VAT referring to goods such as certain exports, food that is not served, newspapers, children’s books, children’s shoes and clothing, public transport services and medication prescriptions.
However, the UK officials announced that starting with January 2011 the standard VAT paid by any English company is going to be increased to 20 percent. For any company paying this UK tax, VAT is charged for all the transactions, whether we talk about business associates or individual customers. Any business that is registered can receive from HRMC the amount they have paid for VAT.
In order to obtain the tax return, the registered English company should provide invoices for the services or goods it sells. These invoices are registered with a specific VAT number also named as registration number. This way, the HRMC is able to return the amount for the UK tax to the businesses that pay the tax. Usually, for the large companies, the UK Companies House provides a VAT number that is specially given to certain companies. Even more, this special number is also benefic for companies as it adds more credibility to any business.