If you’re a vat registered trader in the UK you’ll be able to avoid 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 will allow you to first pay vat and after that cancel it so that your net cost does not increase.
If you’re a trader that utilizes services of foreign companies, especially those situated in vat-friendly eu countries then you certainly might have already paid vat in those countries. On the other hand, you might also have received such services in Britain itself from a supplier situated 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 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 vatnumbersearch.com regulations.
If you have a bit 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. Such an agent would surely understand all uk vat and eu vat regulations and could help you to claim reverse charge vat that may have already been paid to a foreign company situated in another country together with 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 will need to calculate and indicate how much paid in Box 1 of the vat return form. You’ll then need to specify the same amount in Box 4 of the return to ensure the amount stands cancelled. You will also need to specify the total quantity of the provision in Box 6 and 7 of the vat return form so as to complete your reverse charge vat claim. However, you will need to convert the currency of the 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 may go for this type of vat reclaim only if you’re a vat registered trader in Britain. In order to be a vat registered trader, your taxable sales need to go over ?70,000 in the last 12 months while you can even apply before this vat threshold amount has been achieved. Once you start charging vat to your customers and file regular vat returns then any services rendered by you from an overseas 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 usually better to opt for the services of proficient vat agent that may handle all of your vat requirements seamlessly. This will likely allow 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.