If you’re 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 whenever 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 so your net cost doesn’t increase.
If you are a trader that utilizes services of foreign companies, particularly those located 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 the UK itself from the supplier located in a eu country. Every one of these factors would end up increasing your expenses as you might end up paying vat on certain services including those related 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 with a wide reach in most eu countries that practise vat. Such an agent vatvalidation would surely understand all uk vat and eu vat regulations and could enable you to claim reverse charge vat that may have already been paid to a foreign company located 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 Britain then you will need to calculate and indicate how much paid in Box 1 of your vat return form. You will then need to specify exactly the same amount in Box 4 of the return so that the amount stands cancelled. You will also need to specify the full amount of the provision in Box 6 and 7 of the vat return form in order to complete your reverse charge vat claim. However, you will need to convert the currency of any vat paid in the foreign country to sterling before you decide to fill out the amounts in those boxes.
This reverse charge process is also known as tax shift and you can go in for such a vat reclaim only if you’re a vat registered trader in the UK. In order to become a vat registered trader, your taxable sales need to cross over ?70,000 in the previous 12 months while you can even apply before vat threshold amount has been achieved. Once you start charging vat to the 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 are not very difficult, it is always better to opt for the services of a 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 previously been taken care of services rendered by a foreign company within and out the UK.