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 whenever 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 doesn’t increase.
If you’re a trader which uses services of foreign companies, particularly those situated in vat-friendly eu countries then you certainly might have already paid vat in those countries. On the other hand, you may also have obtained such services in Britain itself from a supplier situated in a eu country. Every one of these factors would end up increasing 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 you then 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. This kind of agent would surely understand all uk vat and eu vat regulations and could enable you to claim reverse charge vat that may have already been paid to a foreign company situated in another country together with a vat-friendly eu country.
You can reclaim vat already covered specified services while filing your vat returns itself. If you are in the UK then you will have to calculate and indicate the amount of paid in Box 1 www.vatnumbersearch.com of your vat return form. You’ll then have to specify 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 so as 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 can go in for this type of vat reclaim only if you are a vat registered trader in the UK. 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 has been achieved. Once you start charging vat to your customers and file regular vat returns then any services rendered by you from a foreign 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 really hard, it is usually better to choose services of an proficient vat agent that may handle all 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 which may have previously been paid for services rendered by a foreign company within or outside the UK.