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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 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 that 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 certainly may have already paid vat in those countries. Alternatively, you might also have received such services in Britain itself www.vatcheck.com/vat from a supplier located 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 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 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. Such an agent would surely understand all uk vat and eu vat regulations and may enable you to claim reverse charge vat that may have been paid to a foreign company situated 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 are in Britain then you’ll need to calculate and indicate how much paid in Box 1 of the vat return form. You will then have to specify exactly the same amount in Box 4 of that return to ensure the amount stands cancelled. You’ll have to specify the full 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 need to convert the currency of the vat paid in the foreign country to sterling before you decide to fill in the amounts in those boxes.

This reverse charge process can also be called tax shift and you can go in for this type of vat reclaim only if you’re a vat registered trader in the UK. In order to become a vat registered trader, your taxable sales need to go over ?70,000 in the previous 1 year although you can even apply before vat threshold amount has been achieved. Once you start charging vat to the 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 from hmrc vat department.

Although following vat rules are not very difficult, it is usually preferable to choose services of an proficient vat agent that may handle all your vat requirements seamlessly. This will likely 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 taken care of services rendered by a foreign company within and out the UK.