Claim reverse charge vat on services where vat was already paid

If you’re a vat registered trader in Britain you’ll be able to steer clear of 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 allows you to first pay vat and then cancel it so your net cost does not increase.

If you’re a trader that utilizes services of foreign companies, particularly those situated in vat-friendly eu countries then you certainly may have already paid vat in those countries. On the other hand, you might also have received such services in the UK itself from a supplier located in a eu country. Every one of these factors would vat validation end up increasing your expenses as you might end up paying vat on certain services including those related 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 you then should enrol the expertise of a competent customs and excise customs vat agent having a wide reach practically in most eu countries that practise vat. This kind of agent would surely understand all uk vat and eu vat regulations and could help you to claim reverse charge vat that may have already been paid to a foreign company located in another country including a vat-friendly eu country.

You can reclaim vat already paid for specified services while filing your vat returns itself. If you are in Britain then you will need to calculate and indicate how much paid in Box 1 of your vat return form. You will then have to specify exactly the same amount in Box 4 of that return so that the amount stands cancelled. You’ll have to specify the total amount of the provision in Box 6 and 7 of the vat return form in order to complete your reverse charge vat claim. However, you will need to convert the currency of the vat paid in the foreign country to sterling before you fill in the amounts in those boxes.

This reverse charge process is also known as tax shift and you may go in for this type of vat reclaim only if you are a vat registered trader in the UK. In order to become a vat registered trader, your taxable sales have to go over ?70,000 in the last 1 year although you can 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 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 really hard, it is usually better to opt for the services of proficient vat agent that may handle all your vat requirements seamlessly. This will likely 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 a foreign company within or outside the UK.