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Claim reverse charge vat on services where vat was already paid


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If you are a vat registered trader in Britain you’ll be able to 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 then cancel it so 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. Alternatively, you might also have received such services in the UK itself from a supplier situated in a eu country. All these factors would turn out boosting your expenses as 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.

In case you have a little 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 practically in most eu countries that practise vat. This kind of agent vat validation would surely understand all uk vat and eu vat regulations and could help you to claim reverse charge vat that may have already been paid to a foreign company located in another country together with a vat-friendly eu country.

You are able to reclaim vat already paid for 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 of your vat return form. You’ll then have to specify exactly the same amount in Box 4 of the return to ensure the amount stands cancelled. You will also need to specify the full 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 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 can also be known as tax shift and you may go in for such a vat reclaim only when 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 last 12 months while you can 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 an overseas company can 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 usually preferable to choose services of an 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 previously been paid for services rendered by a foreign company within and out the UK.