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Claim reverse charge vat on services where vat was already paid


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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 has already been paid. This vat procedure allows you to first pay vat and after that cancel it so your net cost doesn’t increase.

If you’re a trader that utilizes services of foreign companies, particularly those located in vat-friendly eu countries then you certainly might have already paid vat in those countries. On the other hand, you might also have received such services in Britain itself from a supplier situated in a eu country. All these factors would vat validation turn out increasing your expenses as you could 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.

In case you have a 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 may enable you to claim reverse charge vat that may have been paid to a foreign company located in another country together with a vat-friendly eu country.

You can 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 the amount of paid in Box 1 of the vat return form. You’ll then have to specify exactly the same amount in Box 4 of that return to ensure 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 so as to complete your reverse charge vat claim. However, you will have to convert the currency of the vat paid in a 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 Britain. In order to be a vat registered trader, your taxable sales need to cross over ?70,000 in the last 1 year although you may even apply before this vat threshold amount may be achieved. As soon as you start charging vat to your customers and file regular vat returns then any services rendered by you from a foreign company could be reclaimed back in future vat returns, provided you follow all necessary guidelines issued by hmrc vat department.

Although following vat rules are not very difficult, it is usually better to opt for the services of an proficient vat agent that may handle all your vat requirements seamlessly. This will enable you to focus 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 way of a foreign company within or outside the UK.