If you are a vat registered trader in Britain then you would have to pay vat on most services and goods but are you aware that claiming vat back can enhance your business cash flow? If you have already paid vat once on any goods or services necessary for your company or paid vat on it even in another eu country then you can certainly submit an application for a vat refund.
Most eu countries have adopted the system of vat or value added tax on movement of goods and services as a way of collecting more revenue and plugging tax leaks. The UK too has moved to vat and if you run a business in the UK then you’ll have to make an application for vat registration when your last 12 month sales turnover touches ?70,000. As a vat registered trader you will need to pay and collect vat on all purchases and sales in connection with your business according to the classification of these goods and services as per the HM Revenue and Customs or hmrc vat department.
However, to prevent double taxation on such services and goods, the hmrc department has established vat rules that will allow you to claim vat back on any goods or services purchased for your business. This amount can be recovered even though you have paid that vat in another eu country that follows vat, provided you are able to show documentary proof which includes the vat invoice or vat receipt. In case you have imported goods into the UK after paying vat in the nation of origin or have attended a trade fair in a foreign eu country where vat is charged for you then it may be claimed back as soon as you fill the necessary vat reclaim form.
You need to hire an excellent vat agent with complete understanding of uk vat and eu vat rules so your vat refund claim is passed in the shortest time possible. You’ll have a time limit of 9 months after the end of the year or so after you had first paid your vat on those services or goods. You may use several online vat services offered by hmrc vat including filing online claims for vat refunds. You will need to register on the hmrc website before you fill the mandatory online vat form for vat reclaim. The form will then be forwarded to the member eu country where you may have paid vat initially, along with scans of vat invoices that you might need to affix to the application.
Once you receive a confirmation usually within 15 days of receipt of your refund claim, it will take around 4 months for the claim to be approved from that member country before you can get your vat back. In the event any additional clarification or documents are needed then you should expect a delay of 4 more months and hence it is essential to get it right the first time itself. Your vat refund can be deposited in a banking account that you specify within or outside the UK. However, this amount will be in the currency of the country of origin and will have to be converted into sterling pounds before it can be transferred to your UK banking account.
Even though the process to reclaim vat back is a bit tedious, an efficient vat agent can apply for vat refunds as your representative and notify you on the status of the applications. The fact is that claiming vat back can indeed improve your business cash flow by pumping back that double-taxed amount directly into your business.