If you are a vat registered trader in the UK 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 allows you to first pay vat and then cancel it so your net cost does not increase.
If you are a trader which uses services of foreign companies, particularly those situated in vat-friendly eu countries then you certainly may have already paid vat in those countries. Alternatively, you may also have received such services in Britain itself from the supplier located in a eu country. All these factors would turn out boosting your expenses since you might 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 along with the European Community simplification www.vatnumbersearch.com regulations.
If you have a lttle bit difficulty in interpreting these vat rules you then should enrol the services of a good 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 help you to claim reverse charge vat that may have been paid to a foreign company located 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’re in the UK then you’ll have to calculate and indicate how much paid in Box 1 of your vat return form. You will then have to specify the same amount in Box 4 of that return to ensure the amount stands cancelled. You’ll have to specify the full quantity 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 out the amounts in those boxes.
This reverse charge process is also known as tax shift and you can go in 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 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 issued by hmrc vat department.
Although following vat rules are not very difficult, it is always better to choose services of a proficient vat agent that can handle all your vat requirements seamlessly. This will likely enable you to concentrate on boosting your business while your vat agent files for reverse charge vat and recovers your taxes which may have already been taken care of services rendered by a foreign company within and out the UK.