If you are a vat registered trader in Britain you’ll be able to avoid 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 allows 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, particularly those located in vat-friendly eu countries then you certainly may have already paid vat in those countries. Alternatively, you might also have received 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 linked 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 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 enable 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 are in the UK then you will need to calculate and indicate the amount of paid in Box 1 of your vat return form. You’ll then need to specify exactly the same amount in Box 4 of the return so that the amount stands cancelled. You’ll need to specify the full quantity 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 the vat paid in a foreign country to sterling before you decide to fill in the amounts in those boxes.
This reverse charge process is also called tax shift and you may go for such a vat reclaim only if you are 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 1 year although you can even apply before vat threshold amount may be achieved. As soon as you start charging vat to the customers and file regular vat returns then any services rendered by you a foreign company could 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 very difficult, it is always preferable to choose services of a proficient vat agent that can 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 that have already been taken care of services rendered by a foreign company within or outside the UK.