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 whenever you claim reverse charge vat on services where vat has already been paid. This vat procedure will allow you to first pay vat and then cancel it so your net cost doesn’t increase.
If you are a trader which uses services of foreign companies, especially those located in vat-friendly eu countries then you certainly might have already paid vat in those countries. On the other hand, you might also have obtained such services in the UK itself from a supplier situated in a eu country. All these factors would vatvalidation.com turn out boosting your expenses since 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 along with the European Community simplification regulations.
If you have a little difficulty in interpreting these vat rules then you should enrol the services of a competent 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 already been paid to a foreign company located in another country together with a vat-friendly eu country.
You can reclaim vat already paid for specified services while filing your vat returns itself. If you’re in Britain 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 that return so that the amount stands cancelled. You will also need to specify the total quantity of the supply in Box 6 and 7 of the vat return form in order to complete your reverse charge vat claim. However, you will have to convert the currency of any vat paid in a foreign country to sterling before you decide to fill out the amounts in those boxes.
This reverse charge process can also be called tax shift and you may go in for such a vat reclaim only when you’re 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 last 1 year although you can even apply before this 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 from a foreign company could be reclaimed back in future vat returns, provided you follow all necessary guidelines issued by hmrc vat department.
Although following vat rules are not really hard, 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 likely enable you to concentrate 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 way of a foreign company within and out the UK.