If you are a vat registered trader in the UK 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 has already been paid. This vat procedure allows you to first pay vat and after that cancel it so that 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 might have already paid vat in those countries. Alternatively, you may also have received such services in Britain itself from the supplier located in a eu country. Every one of these factors would turn out increasing your expenses as you might end up paying vat on certain services including those related 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.
If you have a bit difficulty in interpreting these vat rules you then should enrol the services of a competent customs and excise customs vat agent with a wide reach practically in most eu countries that practise vat. Such an agent www.vatvalidation.com would surely understand all uk vat and eu vat regulations and could help you to claim reverse charge vat that might have already been paid to a foreign company situated in another country including 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 Britain then you’ll need to calculate and indicate how much paid in Box 1 of the vat return form. You’ll then need to specify the same amount in Box 4 of that return to ensure the amount stands cancelled. You will also have to specify the full quantity 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 out the amounts in those boxes.
This reverse charge process can also be known as tax shift and you may go for this type of vat reclaim only when you are a vat registered trader in Britain. In order to be a vat registered trader, your taxable sales need to cross over ?70,000 in the previous 1 year while you can even apply before this vat threshold amount has been achieved. As soon as you start charging vat to the customers and file regular vat returns then any services rendered by you 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 usually better to choose services of a proficient vat agent that can handle all your vat requirements seamlessly. This will enable you to concentrate on boosting your business while your vat agent files for reverse charge vat and recovers your taxes that have previously been paid for services rendered by a foreign company within and out the UK.