If you’re a vat registered trader in Britain then you can steer clear of 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 allows you to first pay vat and after that cancel it so that your net cost does not increase.
If you are 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 may also have received such services in the UK itself from a supplier located in a eu country. All these factors would end up increasing your expenses as 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.
In case you have a little difficulty in interpreting these vat rules then you should enrol the expertise of a good customs and excise customs vat agent having a wide reach practically in most eu countries that practise vat. This kind of agent vatvalidation.com would surely understand all uk vat and eu vat regulations and could enable you to claim reverse charge vat that might have already been paid to a foreign company located in another country together with 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 exactly the same amount in Box 4 of that return to ensure the amount stands cancelled. You’ll need to specify the total quantity 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 the foreign country to sterling before you decide to fill out the amounts in those boxes.
This reverse charge process is also called tax shift and you may go in 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 need to cross over ?70,000 in the previous 12 months although you can even apply before 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 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 are not really hard, it is always preferable to opt for the services of an proficient vat agent that can handle all your vat requirements seamlessly. This will allow you to focus on increasing your business while your vat agent files for reverse charge vat and recovers your taxes which may have already been taken care of services rendered by a foreign company within and out the UK.