If you’re a vat registered trader in Britain you’ll be able to avoid the problem of double taxation on services utilized from foreign companies when 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 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. On the other hand, you may also have received such services in Britain itself from a supplier located in a eu country. Every one of these factors would turn out boosting your expenses since you might 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.
If 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 in most eu countries that practise vat. Such an agent would surely understand all uk vat and eu vat regulations and may help 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 paid for specified services while filing your vat returns itself. If you are in the UK then you’ll have to calculate and indicate the amount of paid in Box 1 vatnumbersearch.com of the vat return form. You’ll then need to specify exactly the same amount in Box 4 of that return to ensure the amount stands cancelled. You will also have to specify the full amount 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 have to convert the currency of the vat paid in a foreign country to sterling before you fill in the amounts in those boxes.
This reverse charge process can also be called tax shift and you can go in for this type of vat reclaim only if you are 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 1 year while you may even apply before this vat threshold amount has been achieved. Once you start charging vat to your customers and file regular vat returns then any services rendered by you an overseas company could be reclaimed back in future vat returns, provided you follow all necessary guidelines issued by hmrc vat department.
Although following vat rules are not really hard, it is usually better to choose services of proficient vat agent that may handle all 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 already been paid for services rendered by a foreign company within and out the UK.