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 when you claim reverse charge vat on services where vat has already been paid. This vat procedure will allow you to first pay vat and then cancel it out so that your net cost doesn’t increase.
If you are a trader that utilizes services of foreign companies, particularly those located in vat-friendly eu countries then you might have already paid vat in those countries. On the other hand, you might also have received such services in the UK itself www.vatcheck.com/vat from the supplier situated in a eu country. All these factors would end up boosting your expenses as you could 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 in conjunction with the European Community simplification regulations.
If you have a lttle bit difficulty in interpreting these vat rules you then should enrol the expertise of a competent customs and excise customs vat agent having a wide reach in most eu countries that practise vat. Such an agent would surely understand all uk vat and eu vat regulations and could help you to claim reverse charge vat that may have been paid to a foreign company located 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’re in Britain then you’ll need to calculate and indicate the amount of paid in Box 1 of the vat return form. You’ll then need to specify the same amount in Box 4 of that return so that the amount stands cancelled. You’ll have 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 any vat paid in a 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 can go for this type of vat reclaim only when you are a vat registered trader in the UK. In order to be a vat registered trader, your taxable sales need to cross over ?70,000 in the previous 12 months although 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 from an overseas company could be reclaimed back in future vat returns, provided you follow all necessary guidelines from hmrc vat department.
Although following vat rules usually are not very difficult, it is always preferable to choose services of an proficient vat agent that can handle all your vat requirements seamlessly. This will likely allow you to concentrate 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 a foreign company within or outside the UK.