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 when you claim reverse charge vat on services where vat was already 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 located in vat-friendly eu countries then you certainly might have already paid vat in those countries. Alternatively, you may also have received such services in Britain itself from the supplier located in a eu country. All these factors would vatvalidation.com end up increasing your expenses as 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.
If 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 enable you to claim reverse charge vat that might have 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 are in the UK then you will have to calculate and indicate the amount of paid in Box 1 of your vat return form. You will then have to specify the same amount in Box 4 of the return to ensure the amount stands cancelled. You’ll have to specify the full amount of the provision in Box 6 and 7 of 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 out the amounts in those boxes.
This reverse charge process can also be known as tax shift and you may go in for such a vat reclaim only if 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 may even apply before vat threshold amount may be achieved. As soon as you start charging vat to the 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 are not very difficult, it is usually preferable to opt for the services of 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 already been taken care of services rendered by a foreign company within or outside the UK.