Claim reverse charge vat on services where vat was already paid

If you’re a vat registered trader in the UK 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 your net cost doesn’t increase.

If you are a trader that utilizes services of foreign companies, especially those located in vat-friendly eu countries then you might have already paid vat in those countries. Alternatively, you may also have obtained such services in the UK itself from the supplier situated in a eu country. Every one of these factors would end up increasing your expenses as you could end up paying vat on certain services including those linked 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 http://vatnumbersearch.com regulations.

In case you have a lttle bit difficulty in interpreting these vat rules then you should enrol the expertise of a competent customs and excise customs vat agent having 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 help you to claim reverse charge vat that might have been paid to a foreign company located in another country together with a vat-friendly eu country.

You can reclaim vat already covered specified services while filing your vat returns itself. If you are in the UK then you will need to calculate and indicate how much paid in Box 1 of your vat return form. You’ll then need to specify the same amount in Box 4 of that return so that the amount stands cancelled. You will also need to specify the total amount 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 fill in the amounts in those boxes.

This reverse charge process can also be known as tax shift and you may go 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 cross over ?70,000 in the previous 1 year although you may even apply before vat threshold amount has been achieved. As soon as you start charging vat to the customers and file regular vat returns then any services rendered by you from a foreign company can be reclaimed back in future vat returns, provided you follow all necessary guidelines issued by 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 of your vat requirements seamlessly. This will 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 taken care of services rendered by a foreign company within or outside the UK.