If you are a vat registered trader in Britain then you can 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 then cancel it out so that your net cost doesn’t increase.
If you’re a trader which uses services of foreign companies, especially those located in vat-friendly eu countries then you may have already paid vat in those countries. Alternatively, you may also have received such services in Britain itself https://vatcheck.com/vat from a supplier situated in a eu country. Every one of these factors would end up boosting your expenses as you could 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.
In case you have a little difficulty in interpreting these vat rules then you should enrol the expertise of a good customs and excise customs vat agent having 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 help you to claim reverse charge vat that may have 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 the UK then you will have to calculate and indicate the amount of paid in Box 1 of the vat return form. You’ll then need to specify exactly the same amount in Box 4 of the return to ensure the amount stands cancelled. You will also need to specify the full quantity of the supply in Box 6 and 7 in the vat return form so as to complete your reverse charge vat claim. However, you will need 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 can go for such a vat reclaim only when 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 12 months although you can even apply before this vat threshold amount has been 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 could 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 choose services of a proficient vat agent that can handle all your vat requirements seamlessly. This will enable 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 paid for services rendered by way of a foreign company within and out the UK.