If you are a vat registered trader in the UK then you would have to pay vat on many services and goods but did you know that claiming vat back can improve 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 definitely submit an application for a vat refund.
Most eu countries have adopted the system of vat or value added tax on movement of products and services as a means of collecting more revenue and plugging tax leaks. Great Britain too has shifted to vat and if you run a business vat verification in the UK then you’ll have to make an application for vat registration when your last 12 month sales turnover touches ?70,000. Being 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 those 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 the business. This amount may be recovered even if you have paid that vat in another eu country that follows vat, provided you are able to 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 has been charged to 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 understanding of uk vat and eu vat rules so that your vat refund claim is passed within the shortest time possible. You’ll have a time frame of 9 months following the end of the year or so once you had first paid your vat on those goods or services. You may use several online vat services offered by hmrc vat including filing online claims for vat refunds. You will have to register at the hmrc website before you fill the required online vat form for vat reclaim. The form will then be sent to the member eu country where you may have paid vat initially, together with scans of vat invoices that you might have to attach to the application.
As soon as you get a confirmation usually within 15 days of receipt of the refund claim, it will take around 4 months for your claim to be approved from that member country before you can get your vat back. In case any additional clarification or documents are needed then you should expect a delay of four more months and hence it is essential to have it right the very first time itself. Your vat refund can be deposited in a banking account which you specify within or outside the UK. However, this amount will be in the currency of the nation of origin and will have to be converted into sterling pounds prior to it being transferred to your UK banking account.
Although the process to reclaim vat back is a little tedious, a competent vat agent can apply for vat refunds as your representative and inform you on the status of the applications. The reality is that claiming vat back can certainly improve your business income by pumping back that double-taxed amount directly into your business.