Claim reverse charge vat on services where vat was already paid

If you’re a vat registered trader in Britain then you can avoid 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 will allow you to first pay vat and then cancel it out so your net cost doesn’t increase.

If you’re a trader which uses services of foreign companies, especially those situated 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 a supplier situated in a eu country. All these factors would end up increasing 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 in conjunction 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 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 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’ll need to calculate and indicate the amount of paid in Box 1 vatnumbersearch of your 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 have to specify the full amount of the provision in Box 6 and 7 in 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 can also be known as tax shift and you can go in for this type of vat reclaim only if you’re a vat registered trader in Britain. In order to become a vat registered trader, your taxable sales need to go over ?70,000 in the previous 1 year although you can even apply before vat threshold amount may be achieved. Once you start charging vat to your customers and file regular vat returns then any services rendered by you an overseas 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 better to choose services of an proficient vat agent that may handle all your vat requirements seamlessly. This will allow you to concentrate on boosting your business while your vat agent files for reverse charge vat and recovers your taxes which may have previously been taken care of services rendered by way of a foreign company within and out the UK.