If you’re a vat registered trader in Britain you’ll be able to avoid the problem of double taxation on services utilized from foreign companies when you claim reverse charge vat on services where vat was already paid. This vat procedure will allow you to first pay vat and after that cancel it so that your net cost does not increase.
If you are a trader which uses services of foreign companies, particularly those situated in vat-friendly eu countries then you may have already paid vat in those countries. On the other hand, you might also have received such services in Britain itself from the supplier situated in a eu country. All these factors would turn out increasing 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 little difficulty in interpreting these vat rules then you should enrol the services of a competent customs and excise customs vat agent having a wide reach practically in most eu countries that practise vat. This kind of agent www.vatvalidation.com would surely understand all uk vat and eu vat regulations and may enable you to claim reverse charge vat that may have already been paid to a foreign company situated in another country including a vat-friendly eu country.
You can reclaim vat already covered specified services while filing your vat returns itself. If you are in Britain then you will need 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 so that the amount stands cancelled. You’ll have to specify the total amount of the provision 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 the vat paid in a foreign country to sterling before you decide to fill out the amounts in those boxes.
This reverse charge process can also be known as tax shift and you may go in for such a vat reclaim only when you’re a vat registered trader in Britain. In order to become a vat registered trader, your taxable sales need to go over ?70,000 in the last 1 year although you can even apply before this 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 from hmrc vat department.
Although following vat rules usually are not very difficult, it is usually preferable to choose services of proficient vat agent that can handle all your vat requirements seamlessly. This will likely enable you to concentrate on boosting your business while your vat agent files for reverse charge vat and recovers your taxes which may have already been taken care of services rendered by a foreign company within or outside the UK.