If you’re a vat registered trader in the UK you’ll be able to steer clear of the problem of double taxation on services utilized from foreign companies whenever you claim reverse charge vat on services where vat has already been paid. This vat procedure will allow you to first pay vat and after that cancel it so your net cost does not increase.
If you’re a trader that utilizes services of foreign companies, especially those located in vat-friendly eu countries then you may have already paid vat in those countries. On the other hand, you might also have obtained such services in the UK itself from a supplier located in a eu country. Every one of these factors would turn out increasing your expenses as you could end up paying vat on certain services including those related to land, property, intra EC-freight services, as well as other such services as defined by the HM Revenue and Customs or hmrc department along with the European Community simplification regulations.
If you have a bit difficulty in interpreting these vat rules you then should enrol the services of a good customs and excise customs vat agent having a wide reach in most eu countries that practise vat. Such an agent vatvalidation.com would surely understand all uk vat and eu vat regulations and may enable you to claim reverse charge vat that might have already 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’re 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 have to specify exactly the same amount in Box 4 of that return to ensure the amount stands cancelled. You’ll need to specify the full 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 the vat paid in the foreign country to sterling before you fill in the amounts in those boxes.
This reverse charge process can also be called tax shift and you can go for such a vat reclaim only when you’re a vat registered trader in the UK. In order to become a vat registered trader, your taxable sales have to go over ?70,000 in the previous 1 year although you can even apply before vat threshold amount has been achieved. Once you start charging vat to your customers and file regular vat returns then any services rendered by you from a foreign company could be reclaimed back in future vat returns, provided you follow all necessary guidelines issued by hmrc vat department.
Although following vat rules are not very difficult, it is always preferable to opt for the services of an proficient vat agent that may handle all your vat requirements seamlessly. This will enable you to focus on boosting your business while your vat agent files for reverse charge vat and recovers your taxes that have already been paid for services rendered by way of a foreign company within and out the UK.