If you’re a vat registered trader in the UK you’ll be able to avoid 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 after that cancel it so that your net cost doesn’t increase.
If you are a trader which uses services of foreign companies, especially those located in vat-friendly eu countries then you might have already paid vat in those countries. On the other hand, 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 turn out boosting your expenses as you could 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 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 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 may 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 are in Britain then you’ll need to calculate and indicate how much paid in Box 1 vat number search 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 need to specify the total quantity of the supply in Box 6 and 7 of the vat return form in order 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 out the amounts in those boxes.
This reverse charge process is also 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 need to cross over ?70,000 in the last 12 months while you may 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 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 usually are not very difficult, it is usually better to opt for the services of an proficient vat agent that may handle all your vat requirements seamlessly. This will likely allow you to focus on boosting 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.