Claim reverse charge vat on services where vat was already paid

If you are a vat registered trader in the UK you'll be able to 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 are a trader that utilizes 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 might also have obtained such services in Britain itself from a supplier situated in a eu country. All these factors would turn out boosting your expenses since you could 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 in conjunction with the European Community simplification vatnumbersearch regulations.

If you have a little difficulty in interpreting these vat rules you then 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 enable you to claim reverse charge vat that might have been paid to a foreign company situated 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 how much paid in Box 1 of the vat return form. You will then need 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 supply 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 any vat paid in a foreign country to sterling before you 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 if you are a vat registered trader in Britain. In order to be a vat registered trader, your taxable sales need to cross over ?70,000 in the last 12 months although you can even apply before 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 an overseas 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 choose services of proficient vat agent that may handle all of your vat requirements seamlessly. This will likely enable you to focus on increasing your business while your vat agent files for reverse charge vat and recovers your taxes that have previously been paid for services rendered by way of a foreign company within or outside the UK.