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


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If you are a vat registered trader in Britain 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 was already paid. This vat procedure allows you to first pay vat and after that cancel it so your net cost doesn’t increase.

If you’re a trader that utilizes services of foreign companies, particularly those situated in vat-friendly eu countries then you may have already paid vat in those countries. Alternatively, you may also have received such services in Britain itself from the supplier situated in a eu country. Every one of these factors would turn out increasing 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.

If you have a little 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 may enable you to claim reverse charge vat that may have already been paid to a foreign company situated 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 vat number search of your vat return form. You will then have to specify the same amount in Box 4 of the return to ensure the amount stands cancelled. You’ll need to specify the full amount 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 need to convert the currency of any vat paid in a foreign country to sterling before you decide to fill out the amounts in those boxes.

This reverse charge process is also known as tax shift and you may go for such a vat reclaim only if you are a vat registered trader in Britain. In order to become a vat registered trader, your taxable sales need to cross over ?70,000 in the last 1 year although 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 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 usually are not very difficult, it is usually preferable to opt for the services of an proficient vat agent that may handle all of your vat requirements seamlessly. This will likely allow you to focus on boosting your business while your vat agent files for reverse charge vat and recovers your taxes that have previously been taken care of services rendered by way of a foreign company within or outside the UK.