If you’re a vat registered trader in the UK 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 your net cost does not increase.
If you are a trader which uses 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 received such services in the UK itself vatcheck.com/vat from a supplier situated in a eu country. All 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 in conjunction with the European Community simplification regulations.
In case you have a little 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 practically in most eu countries that practise vat. This kind of agent would surely understand all uk vat and eu vat regulations and may help 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 are in the UK then you will have to calculate and indicate how much paid in Box 1 of the vat return form. You will then need to specify the same amount in Box 4 of the 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 in order to complete your reverse charge vat claim. However, you will have to convert the currency of any 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 can go for this type of vat reclaim only when you’re a vat registered trader in Britain. In order to be a vat registered trader, your taxable sales have to cross over ?70,000 in the previous 12 months although you may even apply before vat threshold amount may be achieved. Once you start charging vat to the customers and file regular vat returns then any services rendered by you 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 a proficient vat agent that can handle all of your vat requirements seamlessly. This will likely 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 paid for services rendered by a foreign company within or outside the UK.