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 was already paid. This vat procedure will allow you to first pay vat and after that cancel it out so that your net cost does not increase.
If you are a trader which uses 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 Britain itself vat check from the supplier located in a eu country. All these factors would turn out increasing your expenses since you could 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 regulations.
If you have a bit difficulty in interpreting these vat rules you then should enrol the services of a competent customs and excise customs vat agent with a wide reach in most eu countries that practise vat. This kind of agent 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 are able to reclaim vat already paid for specified services while filing your vat returns itself. If you are 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 the same amount in Box 4 of that return to ensure the amount stands cancelled. You will also need to specify the total quantity of the supply 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 any 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 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 cross over ?70,000 in the previous 12 months although you may 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 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 preferable to opt for the services of proficient vat agent that can handle all of your vat requirements seamlessly. This will likely allow you to focus on increasing your business while your vat agent files for reverse charge vat and recovers your taxes that have already been paid for services rendered by a foreign company within or outside the UK.