If you are a vat registered trader in Britain then you can avoid 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 will allow you to first pay vat and then cancel it out so that your net cost does not increase.
If you’re a trader which uses services of foreign companies, particularly those situated in vat-friendly eu countries then you certainly may have already paid vat in those countries. On the other hand, you might also have received such services in Britain itself vatcheck.com/vat from the supplier located in a eu country. All these factors would turn out increasing your expenses since you might 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 little difficulty in interpreting these vat rules you then should enrol the expertise of a good 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 help you to claim reverse charge vat that might have been paid to a foreign company located in another country together with 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 the UK then you’ll have to calculate and indicate how much paid in Box 1 of your vat return form. You’ll then need to specify the same amount in Box 4 of that return so that the amount stands cancelled. You’ll need to specify the full amount of the supply 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 any vat paid in the foreign country to sterling before you fill out the amounts in those boxes.
This reverse charge process can also be known as tax shift and you can go in for such a vat reclaim only if you are a vat registered trader in Britain. In order to be 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. 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 from hmrc vat department.
Although following vat rules usually are not really hard, it is always better to choose services of a proficient vat agent that may handle all your vat requirements seamlessly. This will likely enable you to concentrate on increasing your business while your vat agent files for reverse charge vat and recovers your taxes that have previously been taken care of services rendered by way of a foreign company within and out the UK.