If you are a vat registered trader in Britain then you can 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 then cancel it out so that your net cost doesn’t increase.
If you are a trader which uses services of foreign companies, particularly those situated in vat-friendly eu countries then you might have already paid vat in those countries. On the other hand, you may also have received such services in the UK itself vatcheck.com/vat from the supplier located in a eu country. Every one of these factors would turn out increasing your expenses since 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 then you should enrol the expertise of a competent customs and excise customs vat agent having a wide reach practically 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 situated 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 Britain then you will need 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 that return to ensure the amount stands cancelled. You will also need to specify the total amount of the supply in Box 6 and 7 in 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 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 this type of vat reclaim only when you’re a vat registered trader in the UK. 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 from a foreign 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 usually preferable to opt for the services of a proficient vat agent that may handle all of 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 which may have already been paid for services rendered by way of a foreign company within and out the UK.