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 allows you to first pay vat and then cancel it so that your net cost doesn’t increase.
If you’re a trader which uses services of foreign companies, especially those situated in vat-friendly eu countries then you certainly may have already paid vat in those countries. On the other hand, you might also have received such services in the UK itself from a supplier located in a eu country. Every one of these factors would end up increasing your expenses since you might end up paying vat on certain services including those linked 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 www.vatnumbersearch.com regulations.
If you have a lttle bit difficulty in interpreting these vat rules you then should enrol the services of a good 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 could enable 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 covered specified services while filing your vat returns itself. If you’re in Britain then you’ll need to calculate and indicate how much paid in Box 1 of your vat return form. You’ll then have to specify exactly the same amount in Box 4 of the return so that the amount stands cancelled. You will also have to specify the total quantity 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 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 become a vat registered trader, your taxable sales have to go over ?70,000 in the previous 12 months although you can 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 from hmrc vat department.
Although following vat rules usually 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 likely allow you to concentrate on increasing your business while your vat agent files for reverse charge vat and recovers your taxes that have previously been paid for services rendered by way of a foreign company within or outside the UK.