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


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If you’re a vat registered trader in the UK then you can avoid 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 that your net cost doesn’t increase.

If you are a trader that utilizes 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 a supplier situated in a eu country. Every one of these factors would end up 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.

If you have a lttle bit difficulty in interpreting these vat rules then you should enrol the expertise of a competent customs and excise customs vat agent with a wide reach in most eu countries that practise vat. Such an agent vatvalidation would surely understand all uk vat and eu vat regulations and could enable 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 are able to reclaim vat already covered specified services while filing your vat returns itself. If you are in the UK then you’ll need to calculate and indicate the amount of paid in Box 1 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 will also need to specify the total quantity 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 have 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 can also be called tax shift and you can go in for this type of vat reclaim only when you are a vat registered trader in the UK. In order to be a vat registered trader, your taxable sales have to go over ?70,000 in the previous 12 months although you can even apply before 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 could 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 a proficient vat agent that may handle all your vat requirements seamlessly. This will likely enable you to concentrate on boosting 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.