If you’re a vat registered trader in Britain then you can 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 then cancel it so that your net cost does not increase.
If you’re 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. On the other hand, you may also have obtained such services in Britain itself vatcheck.com/vat from a supplier located in a eu country. All these factors would turn out boosting your expenses since you might end up paying vat on certain services including those linked to land, property, intra EC-freight services, as well as other such services as defined by the HM Revenue and Customs or hmrc department in conjunction 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 competent customs and excise customs vat agent with a wide reach in most eu countries that practise vat. Such an agent would surely understand all uk vat and eu vat regulations and may enable you to claim reverse charge vat that may have already been paid to a foreign company situated in another country including a vat-friendly eu country.
You can reclaim vat already covered specified services while filing your vat returns itself. If you are in the UK then you’ll have to calculate and indicate how much paid in Box 1 of your vat return form. You will then have to specify exactly the same amount in Box 4 of the return to ensure the amount stands cancelled. You will also have to specify the full amount 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 have 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 is also called tax shift and you may go for this type of vat reclaim only when you’re a vat registered trader in Britain. In order to become a vat registered trader, your taxable sales have to go over ?70,000 in the last 12 months while you can even apply before vat threshold amount may be achieved. As soon as 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 from hmrc vat department.
Although following vat rules usually are not really hard, it is usually better to choose services of an proficient vat agent that can handle all of your vat requirements seamlessly. This will likely enable you to concentrate on increasing your business while your vat agent files for reverse charge vat and recovers your taxes which may have already been taken care of services rendered by a foreign company within or outside the UK.