If you are 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 when you claim reverse charge vat on services where vat has already been paid. This vat procedure will allow you to first pay vat and after that cancel it out so your net cost doesn't increase.
If you are a trader which uses services of foreign companies, particularly those located in vat-friendly eu countries then you may have already paid vat in those countries. On the other hand, you might also have received such services in the UK itself http://vatcheck.com/vat from the supplier located in a eu country. Every one of these factors would 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 in conjunction with the European Community simplification regulations.
In case you have a bit difficulty in interpreting these vat rules then you 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 could help 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're in Britain then you will need to calculate and indicate how much paid in Box 1 of the vat return form. You'll then need to specify the same amount in Box 4 of the return to ensure the amount stands cancelled. You will also have to specify the full 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 need to convert the currency of the vat paid in the foreign country to sterling before you decide to fill out the amounts in those boxes.
This reverse charge process is also known as tax shift and you can go in for such a vat reclaim only if you are a vat registered trader in the UK. In order to be a vat registered trader, your taxable sales have to cross over ?70,000 in the previous 1 year while you may 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 very difficult, it is always preferable to choose services of a proficient vat agent that can handle all your vat requirements seamlessly. This will likely allow you to focus on increasing 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.