If you are a vat registered trader in the UK then you can steer clear of the problem of double taxation on services utilized from foreign companies when you claim reverse charge vat on services where vat has already been paid. This vat procedure allows you to first pay vat and after that cancel it so your net cost doesn’t increase.
If you are a trader which uses services of foreign companies, particularly those located in vat-friendly eu countries then you may have already paid vat in those countries. Alternatively, you may also have obtained such services in Britain itself from the supplier located in a eu country. All these factors would end up increasing your expenses as you might end up paying vat on certain services including those related to land, property, intra EC-freight services, and other such services as defined by the HM Revenue and Customs or hmrc department in conjunction with the European Community simplification vatnumbersearch.com regulations.
If you have a little difficulty in interpreting these vat rules you then should enrol the services of a competent customs and excise customs vat agent having a wide reach practically in most eu countries that practise vat. Such an agent would surely understand all uk vat and eu vat regulations and could enable you to claim reverse charge vat that might have been paid to a foreign company located in another country including a vat-friendly eu country.
You are able to reclaim vat already paid for specified services while filing your vat returns itself. If you are in Britain then you will have to calculate and indicate the amount of paid in Box 1 of the vat return form. You will then need to specify exactly the same amount in Box 4 of that return to ensure the amount stands cancelled. You’ll have to specify the total quantity of the supply in Box 6 and 7 in the vat return form so as to complete your reverse charge vat claim. However, you will need to convert the currency of any vat paid in the foreign country to sterling before you decide to fill in the amounts in those boxes.
This reverse charge process is also called tax shift and you may go for such a vat reclaim only when you’re a vat registered trader in Britain. In order to be a vat registered trader, your taxable sales need to cross over ?70,000 in the last 12 months while you may even apply before this vat threshold amount may be achieved. As soon as you start charging vat to the customers and file regular vat returns then any services rendered by you a foreign company can be reclaimed back in future vat returns, provided you follow all necessary guidelines from hmrc vat department.
Although following vat rules are not very difficult, it is usually better to choose services of proficient vat agent that can handle all of your vat requirements seamlessly. This will likely enable you to focus on increasing your business while your vat agent files for reverse charge vat and recovers your taxes which may have already been paid for services rendered by a foreign company within and out the UK.