If you’re a vat registered trader in Britain then you can 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 out so that your net cost doesn’t increase.
If you are a trader that utilizes services of foreign companies, especially 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 the UK itself from the supplier located in a eu country. All these factors would vat validation turn out boosting your expenses as you could end up paying vat on certain services including those linked to land, property, intra EC-freight services, and 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 lttle bit difficulty in interpreting these vat rules then you 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 help you to claim reverse charge vat that might 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 covered specified services while filing your vat returns itself. If you are in Britain then you will have to calculate and indicate how much paid in Box 1 of your vat return form. You’ll then have to specify the same amount in Box 4 of the return so that the amount stands cancelled. You will also need to specify the full 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 any vat paid in the foreign country to sterling before you decide to fill in the amounts in those boxes.
This reverse charge process is also known as tax shift and you may go in for such a 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 last 1 year while you can even apply before 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 could be reclaimed back in future vat returns, provided you follow all necessary guidelines issued by hmrc vat department.
Although following vat rules usually are not very difficult, it is always better to choose services of proficient vat agent that can handle all your vat requirements seamlessly. This will likely allow you to concentrate on boosting your business while your vat agent files for reverse charge vat and recovers your taxes which may have previously been paid for services rendered by a foreign company within or outside the UK.