If you’re 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 allows you to first pay vat and then cancel it out 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 might also have received such services in Britain itself from a supplier situated in a eu country. All these factors would end up increasing your expenses since you might end up paying vat on certain services including those related to land, property, intra EC-freight services, as well as other such services as defined by the HM Revenue and Customs or hmrc department along with the European Community simplification vatnumbersearch.com 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 practically in most eu countries that practise vat. Such an agent would surely understand all uk vat and eu vat regulations and may help you to claim reverse charge vat that may have been paid to a foreign company situated in another country including a vat-friendly eu country.
You can reclaim vat already covered specified services while filing your vat returns itself. If you’re in the UK then you will need to calculate and indicate the amount of paid in Box 1 of the vat return form. You will 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 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 have to convert the currency of the vat paid in a 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 can go in for this type of vat reclaim only if you’re 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 previous 12 months while you can even apply before 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 an overseas company can 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 opt for the services of a proficient vat agent that can handle all of 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 which may have already been taken care of services rendered by way of a foreign company within and out the UK.