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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 whenever you claim reverse charge vat on services where vat has already been paid. This vat procedure will allow you to first pay vat and then cancel it out so your net cost doesn’t increase.

If you’re a trader that utilizes services of foreign companies, especially those situated in vat-friendly eu countries then you certainly may have already paid vat in those countries. Alternatively, you might also have received such services in Britain itself from the supplier located in a eu country. All these factors would turn out boosting 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 vatnumbersearch regulations.

If 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 with a wide reach in most eu countries that practise vat. This kind of agent would surely understand all uk vat and eu vat regulations and could help 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 can reclaim vat already covered specified services while filing your vat returns itself. If you’re in Britain then you will have to calculate and indicate how much paid in Box 1 of the vat return form. You’ll then have 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 of the vat return form in order 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 fill in the amounts in those boxes.

This reverse charge process is also known as tax shift and you may go for this type of vat reclaim only when you’re 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. 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 usually are not very difficult, it is always better to choose services of proficient vat agent that may handle all your vat requirements seamlessly. This will likely enable you to concentrate 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 a foreign company within and out the UK.