If you’re a vat registered trader in Britain 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 does not increase.
If you’re a trader that utilizes services of foreign companies, especially those located in vat-friendly eu countries then you certainly may have already paid vat in those countries. Alternatively, you might also have obtained such services in Britain itself from a supplier situated in a eu country. Every one of these factors would end up boosting 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 in conjunction with the European Community simplification regulations.
If you have a lttle bit difficulty in interpreting these vat rules you then should enrol the expertise of a competent customs and excise customs vat agent with a wide reach in most eu countries that practise vat. This kind of agent vat validation 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 located in another country together with a vat-friendly eu country.
You can reclaim vat already paid for 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 the vat return form. You’ll then have to specify exactly the same amount in Box 4 of that return to ensure the amount stands cancelled. You’ll need to specify the total quantity of the provision in Box 6 and 7 in 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 fill in the amounts in those boxes.
This reverse charge process is also called tax shift and you can go in for this type of vat reclaim only if you are a vat registered trader in the UK. In order to be a vat registered trader, your taxable sales need to cross over ?70,000 in the last 12 months although you can even apply before vat threshold amount may be achieved. Once you start charging vat to your customers and file regular vat returns then any services rendered by you from an overseas company can be reclaimed back in future vat returns, provided you follow all necessary guidelines from hmrc vat department.
Although following vat rules are not very difficult, it is always better to opt for the 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 previously been paid for services rendered by a foreign company within and out the UK.