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 has already been paid. This vat procedure allows you to first pay vat and after that cancel it so that your net cost does not increase.
If you are a trader that utilizes services of foreign companies, especially those located in vat-friendly eu countries then you certainly might have already paid vat in those countries. Alternatively, you might also have received such services in Britain itself from the supplier located in a eu country. All these factors would end up increasing your expenses since you could end up paying vat on certain services including those related 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 www.vatnumbersearch.com regulations.
If you have a lttle bit difficulty in interpreting these vat rules then you should enrol the expertise of a competent customs and excise customs vat agent with a wide reach practically in most eu countries that practise vat. Such an agent would surely understand all uk vat and eu vat regulations and could help 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 paid for specified services while filing your vat returns itself. If you are in Britain then you’ll have to calculate and indicate how much paid in Box 1 of your vat return form. You will 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 total quantity of the provision in Box 6 and 7 of the vat return form so as to complete your reverse charge vat claim. However, you will have 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 can also be known as tax shift and you may go in for this type of vat reclaim only when you are a vat registered trader in the UK. In order to be a vat registered trader, your taxable sales need to go over ?70,000 in the previous 1 year 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 an overseas 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 really hard, it is usually better to opt for the services of an proficient vat agent that may handle all of your vat requirements seamlessly. This will 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 paid for services rendered by way of a foreign company within and out the UK.