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 so your net cost does not increase.
If you’re a trader which uses services of foreign companies, particularly those located in vat-friendly eu countries then you certainly might have already paid vat in those countries. Alternatively, you might also have received such services in Britain itself from a supplier situated in a eu country. All these factors would turn out boosting your expenses since you could end up paying vat on certain services including those linked 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 you then should enrol the services of a good customs and excise customs vat agent having a wide reach in most eu countries that practise vat. This kind of agent http://vatvalidation.com would surely understand all uk vat and eu vat regulations and could enable you to claim reverse charge vat that might have 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’re in Britain then you’ll have to calculate and indicate how much paid in Box 1 of the vat return form. You will then need to specify 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 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 the vat paid in the foreign country to sterling before you decide to fill in the amounts in those boxes.
This reverse charge process is also known as tax shift and you can go in for this type of vat reclaim only if you are a vat registered trader in the UK. In order to become a vat registered trader, your taxable sales need to cross over ?70,000 in the last 1 year while 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 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 are not very difficult, it is always preferable to opt for the services of an proficient vat agent that can handle all your vat requirements seamlessly. This will likely enable you to focus on boosting 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 or outside the UK.