If you’re a vat registered trader in the UK you’ll be able to 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 after that cancel it so that your net cost does not increase.
If you’re a trader which uses services of foreign companies, especially those situated in vat-friendly eu countries then you may have already paid vat in those countries. Alternatively, you might also vatnumbersearch have obtained such services in the UK itself from the supplier located in a eu country. Every one of these factors would turn out increasing your expenses since you might end up paying vat on certain services including those related 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 you then 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 already been paid to a foreign company located in another country together with a vat-friendly eu country.
You are able to reclaim vat already covered 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 so that the amount stands cancelled. You will also have to specify the total 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 fill in the amounts in those boxes.
This reverse charge process can also be known as tax shift and you may go for such a vat reclaim only if you are 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 12 months although you may even apply before this 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 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 are not very difficult, it is usually preferable to opt for the services of a proficient vat agent that can handle all of your vat requirements seamlessly. This will enable you to focus on increasing your business while your vat agent files for reverse charge vat and recovers your taxes that have already been paid for services rendered by a foreign company within or outside the UK.