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Claim reverse charge vat on services where vat was already paid


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If you’re a vat registered trader in the UK then you can steer clear of 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 allows you to first pay vat and then cancel it so your net cost doesn’t increase.

If you are a trader which uses services of foreign companies, especially those situated in vat-friendly eu countries then you may have already paid vat in those countries. On the other hand, you might also have received such services in the UK itself http://vatcheck.com/vat from the supplier situated in a eu country. Every one of these factors would end up boosting your expenses as you might 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 regulations.

In case you have a bit difficulty in interpreting these vat rules you then should enrol the services of a good customs and excise customs vat agent with a wide reach practically in most eu countries that practise vat. This kind of 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 covered specified services while filing your vat returns itself. If you’re in the UK then you’ll need to calculate and indicate how much paid in Box 1 of the vat return form. You’ll then need to specify exactly the same amount in Box 4 of the return so that the amount stands cancelled. You’ll need to specify the total quantity 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 have to convert the currency of any vat paid in the foreign country to sterling before you fill in the amounts in those boxes.

This reverse charge process can also be called tax shift and you may go for such a vat reclaim only if you’re 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 last 1 year while you may even apply before vat threshold amount has been achieved. As soon as you start charging vat to your 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 are not really hard, it is usually better to choose services of an proficient vat agent that may handle all 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 which may have already been paid for services rendered by a foreign company within and out the UK.