If you’re a vat registered trader in the UK 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 was already paid. This vat procedure will allow you to first pay vat and after that cancel it so that your net cost doesn’t increase.
If you are a trader that utilizes services of foreign companies, especially 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 the UK itself from the supplier located in a eu country. Every one of these factors would www.vatvalidation.com end up boosting your expenses as 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 along with the European Community simplification regulations.
In case you have a bit difficulty in interpreting these vat rules then you should enrol the expertise of a good customs and excise customs vat agent having 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 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 are able to reclaim vat already covered specified services while filing your vat returns itself. If you’re in Britain then you will need to calculate and indicate the amount of 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 have to specify the total 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 any vat paid in the 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 for this type of vat reclaim only if you are a vat registered trader in Britain. In order to become a vat registered trader, your taxable sales need to go over ?70,000 in the last 12 months while you may even apply before 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 always better to opt for the services of proficient vat agent that may handle all of your vat requirements seamlessly. This will allow you to concentrate on increasing your business while your vat agent files for reverse charge vat and recovers your taxes that have already been paid for services rendered by a foreign company within and out the UK.