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

If you are a vat registered trader in the UK then you can 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 will allow you to first pay vat and then cancel it out so that your net cost does not increase.

If you are a trader that utilizes services of foreign companies, especially those located in vat-friendly eu countries then you might have already paid vat in those countries. On the other hand, you might also have received such services in the UK itself from a supplier located in a eu country. All these factors would end up boosting your expenses since 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 in conjunction with the European Community simplification regulations.

If you have a little difficulty in interpreting these vat rules then you should enrol the services of a competent customs and excise customs vat agent with a wide reach in most eu countries that practise vat. Such an 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 including a vat-friendly eu country.

You can reclaim vat already paid for specified services while filing your vat returns itself. If you are in the UK then you will need to calculate and indicate the amount of vat paid in Box 1 of your vat return form. You will then need to specify the same amount in Box 4 of that return so that 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 any vat paid in a 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 can go in for such a vat reclaim only if you are 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 although you can even apply before this 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 are not very difficult, it is always better to opt for the services of a proficient vat agent that can handle all your vat requirements seamlessly. This will allow you to concentrate on increasing your business while your vat agent files for reverse charge vat and recovers your taxes that have already been paid for services rendered by a foreign company within or outside the UK.