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 does not increase.
If you are a trader which uses services of foreign companies, especially those located in vat-friendly eu countries then you may have already paid vat in those countries. Alternatively, you may also have received such services in the UK itself from a supplier situated in a eu country. Every one of these factors would http://vatvalidation.com 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 along with the European Community simplification regulations.
If you have a bit difficulty in interpreting these vat rules you then should enrol the expertise of a good customs and excise customs vat agent having a wide reach in most eu countries that practise vat. Such an agent would surely understand all uk vat and eu vat regulations and may enable you to claim reverse charge vat that might have already been paid to a foreign company situated in another country together with a vat-friendly eu country.
You are able to reclaim vat already paid for specified services while filing your vat returns itself. If you’re in Britain then you will have 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 to ensure the amount stands cancelled. You will also need to specify the full amount of the supply in Box 6 and 7 in the vat return form in order 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 can also be known as tax shift and you can go for this type of vat reclaim only when you’re 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 previous 1 year while you can even apply before this vat threshold amount has been achieved. Once you start charging vat to the customers and file regular vat returns then any services rendered by you from an overseas 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 always preferable to opt for the services of an proficient vat agent that can handle all of your vat requirements seamlessly. This will likely enable you to focus on boosting 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.