If you are a vat registered trader in the UK then you can 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 after that cancel it so that your net cost doesn’t increase.
If you are a trader that utilizes services of foreign companies, particularly those situated in vat-friendly eu countries then you certainly may have already paid vat in those countries. Alternatively, you might also have obtained such services in Britain itself from a supplier situated in a eu country. All these factors would turn out increasing your expenses since 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 lttle bit difficulty in interpreting these vat rules you then should enrol the services of a competent customs and excise customs vat agent having a wide reach in most eu countries that practise vat. This kind of agent vatvalidation.com would surely understand all uk vat and eu vat regulations and may help you to claim reverse charge vat that may have been paid to a foreign company located in another country including 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 the UK then you will have to calculate and indicate how much paid in Box 1 of your vat return form. You will then have to specify exactly the same amount in Box 4 of the return to ensure the amount stands cancelled. You’ll have to specify the total quantity of the supply 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 the vat paid in the foreign country to sterling before you decide to fill in the amounts in those boxes.
This reverse charge process can also be called tax shift and you may go in 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 have to go over ?70,000 in the previous 12 months although you may even apply before this vat threshold amount has been achieved. As soon as 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 usually are not really hard, it is always preferable to opt for the services of an proficient vat agent that may handle all of your vat requirements seamlessly. This will allow you to concentrate on increasing your business while your vat agent files for reverse charge vat and recovers your taxes that have previously been paid for services rendered by way of a foreign company within or outside the UK.