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 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, especially those located 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 the UK itself from a supplier located in a eu country. All these factors would https://vatvalidation.com turn out 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 along with the European Community simplification regulations.
In case you have a lttle bit difficulty in interpreting these vat rules then you should enrol the services 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 enable you to claim reverse charge vat that may have already been paid to a foreign company situated 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 will have to calculate and indicate the amount of paid in Box 1 of the vat return form. You will then have to specify exactly the same amount in Box 4 of that return so that the amount stands cancelled. You will also 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 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 when you are a vat registered trader in the UK. In order to become a vat registered trader, your taxable sales need to go over ?70,000 in the last 1 year although you may even apply before this 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 from an overseas company can 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 an proficient vat agent that may handle all of your vat requirements seamlessly. This will enable you to concentrate on increasing 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 a foreign company within and out the UK.