If you’re a vat registered trader in Britain you’ll be able to 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 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. On the other hand, you might also have obtained such services in the UK itself www.vatcheck.com/vat from a supplier located in a eu country. Every one of these factors would turn out boosting your expenses since you might 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 along with the European Community simplification regulations.
In case you have a lttle bit difficulty in interpreting these vat rules you then should enrol the services 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 enable you to claim reverse charge vat that might have already 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 have to calculate and indicate the amount of paid in Box 1 of the vat return form. You’ll then have to specify the same amount in Box 4 of that return to ensure the amount stands cancelled. You will also need to specify the total quantity of the supply in Box 6 and 7 of 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 the foreign country to sterling before you decide to fill out the amounts in those boxes.
This reverse charge process can also be called tax shift and you may go for this type of vat reclaim only when you are a vat registered trader in Britain. In order to be a vat registered trader, your taxable sales have 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 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 are not very difficult, it is always better to opt for the services of an proficient vat agent that can handle all your vat requirements seamlessly. This will enable you to focus on increasing your business while your vat agent files for reverse charge vat and recovers your taxes that have already been taken care of services rendered by way of a foreign company within and out the UK.