If you’re a vat registered trader in the UK then you would need to pay vat on most services and goods but did you know that claiming vat back can enhance your business income? If you have already paid vat once on any goods or services necessary for your business 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 means of collecting more revenue and plugging tax leaks. The UK too has moved to vat and if you operate a company in the UK then you will need to apply for vat control vat registration once your last Twelve month sales turnover touches ?70,000. As a vat registered trader you will need to pay and collect vat on all purchases and sales related to your company depending on the classification of these goods and services according to the HM Revenue and Customs or hmrc vat department.
However, in order to avoid double taxation on such goods and services, the hmrc department has produced vat rules that will allow you to claim vat back on any services or goods purchased for the business. This amount can be recovered even though you have paid that vat in another eu country that follows vat, provided you can show documentary proof that includes the vat invoice or vat receipt. If 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 these can be claimed back after you fill the necessary vat reclaim form.
You need to hire a proficient vat agent with complete knowledge of uk vat and eu vat rules so your vat refund claim is passed in the shortest time possible. You will have a time limit of 9 months after the end of the year or so once you had first paid your vat on those goods or services. You can use several online vat services offered by hmrc vat including filing online claims for vat refunds. You will have to register on the hmrc website before you can fill the required online vat form for vat reclaim. The form is then sent to the member eu country where you might have paid vat initially, together with scans of vat invoices which you may have to affix to the application.
As soon as you get 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 other clarification or documents are needed then you should expect a delay of 4 more months and hence it is vital to have it right the first time itself. Your vat refund may be deposited in any banking account which you specify within or outside Britain. However, this amount will be in the currency of the nation of origin and will have to be converted into sterling pounds before it can be transferred to your UK bank account.
Although the process to reclaim vat back is a bit tedious, a competent vat agent can apply for vat refunds on your behalf and inform you on the status of your applications. The reality is that claiming vat back can indeed improve your business cash flow by pumping back that double-taxed amount back into your business.