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 so that your net cost does not increase.
If you are a trader which uses services of foreign companies, especially those located in vat-friendly eu countries then you certainly may have already paid vat in those countries. On the other hand, you may also have obtained such services in Britain itself from the supplier situated in a eu country. All these factors would http://vatvalidation.com 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 along with the European Community simplification regulations.
In case you have a little difficulty in interpreting these vat rules then you should enrol the services of a good customs and excise customs vat agent having 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 may enable you to claim reverse charge vat that may have been paid to a foreign company located in another country including a vat-friendly eu country.
You are able to reclaim vat already paid for specified services while filing your vat returns itself. If you're in the UK then you will need to calculate and indicate the amount of paid in Box 1 of your vat return form. You will then have to specify exactly the same amount in Box 4 of the return so that the amount stands cancelled. You will also need to specify the total amount of the supply 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 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 may go in for this type of vat reclaim only if you are 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 previous 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 a foreign company can be reclaimed back in future vat returns, provided you follow all necessary guidelines from hmrc vat department.
Although following vat rules are not really hard, it is usually better to choose services of a proficient vat agent that can handle all your vat requirements seamlessly. This will 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 a foreign company within or outside the UK.