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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 you’ll be able to steer clear of 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 so your net cost doesn’t increase.

If you are 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. On the other hand, you might also have received such services in the UK itself from the supplier situated 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 linked 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 regulations.

In case you have a little difficulty in interpreting these vat rules then you should enrol the services of a good 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 might have already been paid to a foreign company located 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’re in the UK then you’ll have to calculate and indicate how much paid in Box 1 vatnumbersearch of the vat return form. You’ll then need to specify exactly the same amount in Box 4 of that return to ensure the amount stands cancelled. You’ll have to specify the total amount 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 have to convert the currency of any vat paid in a foreign country to sterling before you decide to fill in the amounts in those boxes.

This reverse charge process can also be known as tax shift and you may go in for this type of vat reclaim only if you are a vat registered trader in the UK. In order to be a vat registered trader, your taxable sales need to go over ?70,000 in the last 1 year although you may even apply before this vat threshold amount may be achieved. As soon as 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 are not very difficult, it is usually better to opt for the services of an proficient vat agent that can handle all of your vat requirements seamlessly. This will enable you to concentrate 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 way of a foreign company within or outside the UK.