If you are a vat registered trader in Britain you’ll be able to steer clear of the problem of double taxation on services utilized from foreign companies when you claim reverse charge vat on services where vat was already paid. This vat procedure will allow you to first pay vat and after that cancel it out so that your net cost doesn’t increase.
If you’re a trader which uses services of foreign companies, especially those situated in vat-friendly eu countries then you certainly may have already paid vat in those countries. Alternatively, you might also have received such services in Britain itself from the supplier located in a eu country. All these factors would turn out boosting your expenses as you could end up paying vat on certain services including those linked to land, property, intra EC-freight services, and 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 expertise of a good customs and excise customs vat agent having 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 help 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 can reclaim vat already paid for specified services while filing your vat returns itself. If you are in Britain then you’ll need to calculate and indicate how much paid in Box 1 http://vatnumbersearch.com of the vat return form. You’ll then need to specify the same amount in Box 4 of the return so that the amount stands cancelled. You will also need to specify the total amount 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 the vat paid in a foreign country to sterling before you decide to fill out the amounts in those boxes.
This reverse charge process can also be known as tax shift and you can 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 although you may even apply before this 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 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 really hard, it is always preferable to opt for the services of proficient vat agent that can handle all of your vat requirements seamlessly. This will likely 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 paid for services rendered by a foreign company within and out the UK.