If you are a vat registered trader in Britain 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 so that your net cost does not increase.
If you're a trader that utilizes 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 Britain itself from a supplier situated in a eu country. All these factors would end up boosting your expenses since 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 expertise of a competent customs and excise customs vat agent with a wide reach 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 located in another country including a vat-friendly eu country.
You can reclaim vat already paid for specified services while filing your vat returns itself. If you're in the UK then you'll need to calculate and indicate the amount of paid in Box 1 http://vatnumbersearch.com of the vat return form. You will then have to specify exactly the same amount in Box 4 of the 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 the vat paid in a foreign country to sterling before you decide to fill in the amounts in those boxes.
This reverse charge process is also known as tax shift and you may go in for this type of vat reclaim only when you are a vat registered trader in Britain. In order to become a vat registered trader, your taxable sales need to go over ?70,000 in the last 12 months although you can even apply before this vat threshold amount may be achieved. Once you start charging vat to the customers and file regular vat returns then any services rendered by you 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 usually are not very difficult, it is usually better to opt for the services of proficient vat agent that can handle all of your vat requirements seamlessly. This will likely allow you to focus 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 way of a foreign company within and out the UK.