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 whenever you claim reverse charge vat on services where vat has already been paid. This vat procedure allows you to first pay vat and after that cancel it out so that your net cost does not increase.
If you are a trader which uses services of foreign companies, especially those situated in vat-friendly eu countries then you might have already paid vat in those countries. On the other hand, you may also have obtained such services in Britain itself from a supplier located in a eu country. All these factors would end up boosting your expenses as you might end up paying vat on certain services including those related 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.
In case 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 practically in most eu countries that practise vat. Such an agent vatvalidation.com would surely understand all uk vat and eu vat regulations and may enable you to claim reverse charge vat that may have been paid to a foreign company situated in another country together with a vat-friendly eu country.
You are able to reclaim vat already paid for specified services while filing your vat returns itself. If you are in the UK then you'll need to calculate and indicate the amount of paid in Box 1 of the vat return form. You will then have to specify the same amount in Box 4 of the return so that the amount stands cancelled. You'll need to specify the full amount of the provision 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 any vat paid in the foreign country to sterling before you fill out the amounts in those boxes.
This reverse charge process can also be known as tax shift and you may 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 cross over ?70,000 in the last 1 year although you can even apply before this vat threshold amount has been achieved. Once you start charging vat to the 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 preferable to opt for the services of a 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 which may have previously been paid for services rendered by a foreign company within or outside the UK.