If you’re a vat registered trader in Britain you’ll be able to 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 allows you to first pay vat and then cancel it out so your net cost doesn’t increase.
If you’re a trader which uses services of foreign companies, particularly those situated in vat-friendly eu countries then you certainly might have already paid vat in those countries. On the other hand, you may also have received such services in the UK itself from a supplier located in a eu country. Every one of these factors would turn out boosting your expenses since 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 in conjunction with the European Community simplification regulations.
If you have a lttle bit 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. Such an agent www.vatvalidation.com would surely understand all uk vat and eu vat regulations and may help you to claim reverse charge vat that might 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 the UK then you’ll have 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 will also need to specify the full amount of the provision 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 out 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 when you’re a vat registered trader in the UK. In order to become a vat registered trader, your taxable sales need to go over ?70,000 in the previous 12 months although you may even apply before vat threshold amount may be achieved. Once you start charging vat to the customers and file regular vat returns then any services rendered by you a foreign company can be reclaimed back in future vat returns, provided you follow all necessary guidelines issued by hmrc vat department.
Although following vat rules are not really hard, it is usually better to opt for the services of an proficient vat agent that may handle all of your vat requirements seamlessly. This will allow 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 or outside the UK.