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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 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 was already paid. This vat procedure will allow you to first pay vat and then cancel it out so your net cost does not increase.

If you are a trader which uses services of foreign companies, particularly those located in vat-friendly eu countries then you might have already paid vat in those countries. Alternatively, you may also have received such services in the UK itself from the supplier located in a eu country. Every one of these factors would end up increasing 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 in conjunction with the European Community simplification http://vatnumbersearch.com regulations.

If you have a lttle bit difficulty in interpreting these vat rules then you should enrol the expertise of a good customs and excise customs vat agent having 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 enable you to claim reverse charge vat that might have been paid to a foreign company situated in another country together with a vat-friendly eu country.

You can reclaim vat already paid for specified services while filing your vat returns itself. If you’re in the UK then you will have to calculate and indicate how much paid in Box 1 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 will also have to specify the full amount of the provision in Box 6 and 7 of the vat return form so as to complete your reverse charge vat claim. However, you will have to convert the currency of any vat paid in the foreign country to sterling before you decide to fill in the amounts in those boxes.

This reverse charge process is also 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 be a vat registered trader, your taxable sales have to cross over ?70,000 in the previous 1 year while you can even apply before this vat threshold amount may be achieved. As soon as you start charging vat to the customers and file regular vat returns then any services rendered by you 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 are not really hard, it is usually preferable to choose services of proficient vat agent that can handle all of your vat requirements seamlessly. This will 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 paid for services rendered by way of a foreign company within and out the UK.