Claim reverse charge vat on services where vat has already been paid

If you're a vat registered trader in the UK then you can avoid 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 allows you to first pay vat and after that cancel it out so your net cost doesn't increase.

If you're a trader that utilizes services of foreign companies, particularly those located 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 the supplier situated in a eu country. Every one of these factors would end up increasing your expenses since you could 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 in conjunction with the European Community simplification regulations.

If you have a little difficulty in interpreting these vat rules you then should enrol the expertise of a competent 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 help you to claim reverse charge vat that may have already been paid to a foreign company located in another country including 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'll need to calculate and indicate the amount of paid in Box 1 vatnumbersearch of the vat return form. You will then need to specify the same amount in Box 4 of the return so that the amount stands cancelled. You will also have to specify the full quantity of the provision in Box 6 and 7 in the vat return form in order 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 called tax shift and you can go in for such a vat reclaim only when you are a vat registered trader in the UK. In order to become a vat registered trader, your taxable sales need to cross over ?70,000 in the previous 12 months while you can even apply before vat threshold amount has been achieved. Once you start charging vat to your customers and file regular vat returns then any services rendered by you an overseas 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 always better to choose services of an proficient vat agent that can handle all your vat requirements seamlessly. This will allow you to focus on boosting your business while your vat agent files for reverse charge vat and recovers your taxes which may have previously been taken care of services rendered by a foreign company within and out the UK.