If you are a vat registered trader in Britain 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 does not increase.
If you’re a trader which uses services of foreign companies, especially those situated 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 a supplier located in a eu country. Every one of these factors would http://vatvalidation.com end up 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 in conjunction with the European Community simplification regulations.
In case you have a little difficulty in interpreting these vat rules then you should enrol the expertise of a competent customs and excise customs vat agent with a wide reach practically in most eu countries that practise vat. This kind of agent would surely understand all uk vat and eu vat regulations and may help you to claim reverse charge vat that may have already been paid to a foreign company located in another country together with a vat-friendly eu country.
You are able to reclaim vat already covered specified services while filing your vat returns itself. If you’re in Britain then you will need to calculate and indicate the amount of paid in Box 1 of the vat return form. You’ll then need to specify the same amount in Box 4 of that return to ensure the amount stands cancelled. You’ll have to specify the full quantity of the provision 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 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 known as tax shift and you can go for such a vat reclaim only when you are a vat registered trader in the UK. In order to be a vat registered trader, your taxable sales have to go over ?70,000 in the previous 1 year while you may even apply before vat threshold amount may be achieved. Once you start charging vat to your customers and file regular vat returns then any services rendered by you from a foreign company can 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 proficient vat agent that may handle all your vat requirements seamlessly. This will enable you to concentrate on boosting your business while your vat agent files for reverse charge vat and recovers your taxes which may have previously been taken care of services rendered by way of a foreign company within or outside the UK.