If you are a vat registered trader in the UK you’ll be able to 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 after that cancel it out so that your net cost does not increase.
If you’re a trader which uses services of foreign companies, particularly those situated in vat-friendly eu countries then you may have already paid vat in those countries. On the other hand, you may also have received such services in Britain itself www.vatcheck.com/vat from the supplier located in a eu country. Every one of these factors would end up boosting your expenses as 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 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 competent customs and excise customs vat agent having a wide reach in most eu countries that practise vat. This kind of agent would surely understand all uk vat and eu vat regulations and could help you to claim reverse charge vat that may 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 Britain 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 so that the amount stands cancelled. You will also need to specify the total 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 out 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 the UK. In order to become a vat registered trader, your taxable sales have to cross over ?70,000 in the previous 12 months while you can even apply before vat threshold amount may be achieved. Once you start charging vat to your customers and file regular vat returns then any services rendered by you from 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 usually are not really hard, it is usually preferable to choose services of a proficient vat agent that can handle all 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 way of a foreign company within and out the UK.