If you are a vat registered trader in Britain you’ll be able to avoid 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 allows you to first pay vat and then cancel it out so your net cost doesn’t increase.
If you’re a trader that utilizes services of foreign companies, particularly those situated in vat-friendly eu countries then you certainly might have already paid vat in those countries. On the other hand, you may also have obtained such services in Britain itself from the supplier located in a eu country. Every one of these factors would vatvalidation.com end up increasing your expenses as 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 along with the European Community simplification regulations.
In case 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 with a wide reach in most eu countries that practise vat. This kind of agent would surely understand all uk vat and eu vat regulations and may enable you to claim reverse charge vat that might have 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 are in Britain then you’ll need to calculate and indicate the amount of paid in Box 1 of the vat return form. You will then need to specify the same amount in Box 4 of that return to ensure the amount stands cancelled. You’ll need to specify the full 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 need to convert the currency of any vat paid in a foreign country to sterling before you fill out the amounts in those boxes.
This reverse charge process is also called tax shift and you may go for such a vat reclaim only if you’re a vat registered trader in Britain. In order to be a vat registered trader, your taxable sales have to go over ?70,000 in the previous 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 an overseas 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 always preferable to choose services of an proficient vat agent that can handle all of your vat requirements seamlessly. This will allow you to focus on increasing your business while your vat agent files for reverse charge vat and recovers your taxes that have previously been taken care of services rendered by a foreign company within or outside the UK.