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 has already been paid. This vat procedure allows you to first pay vat and after that cancel it out so your net cost does not increase.
If you’re a trader which uses services of foreign companies, particularly those situated in vat-friendly eu countries then you certainly might have already paid vat in those countries. On the other hand, you might also have received such services in the UK itself www.vatcheck.com/vat from the supplier located in a eu country. Every one of these factors would turn out increasing your expenses since 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 in conjunction with the European Community simplification regulations.
In case you have a little difficulty in interpreting these vat rules then you should enrol the expertise of a competent 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 could 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’re in the UK then you will need to calculate and indicate how much paid in Box 1 of your vat return form. You’ll then have to specify exactly the same amount in Box 4 of the return so that the amount stands cancelled. You will also need to specify the total amount 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 have to convert the currency of the 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 may go for this type of vat reclaim only when you’re a vat registered trader in the UK. 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 from a foreign company can be reclaimed back in future vat returns, provided you follow all necessary guidelines from hmrc vat department.
Although following vat rules usually are not very difficult, it is always preferable to choose services of a 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 previously been paid for services rendered by way of a foreign company within and out the UK.