If you’re a vat registered trader in the UK then you can 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 then cancel it so your net cost doesn’t increase.
If you are a trader which uses services of foreign companies, particularly those located in vat-friendly eu countries then you might have already paid vat in those countries. Alternatively, you might also have received such services in the UK itself from a supplier located in a eu country. All these factors would www.vatvalidation.com 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 bit difficulty in interpreting these vat rules then you should enrol the services of a competent customs and excise customs vat agent with 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 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 covered specified services while filing your vat returns itself. If you are in the UK then you’ll have to calculate and indicate how much paid in Box 1 of your 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 of the vat return form in order to complete your reverse charge vat claim. However, you will have 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 can also be known as tax shift and you can go in for such a vat reclaim only when you’re 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 previous 1 year while you can even apply before vat threshold amount may be 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 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 proficient vat agent that may handle all of your vat requirements seamlessly. This will likely enable you to concentrate on increasing your business while your vat agent files for reverse charge vat and recovers your taxes that have previously been taken care of services rendered by way of a foreign company within or outside the UK.