If you’re a vat registered trader in the UK then you would need to pay vat on most goods and services 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 required for your business or paid vat on it in another eu country then you can certainly submit an application for a vat refund.
Most eu countries now utilize the system of vat or value added tax on movement of products and services as a way of collecting more revenue and plugging tax leaks. The UK too has shifted to vat and if you run a company in the UK then you’ll need to make an application for vat registration when your last 12 month sales turnover touches ?70,000 check vat number. As a vat registered trader you will have to pay and collect vat on all purchases and sales related to your business according to the classification of these goods and services according to 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 services or goods 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 can show documentary proof which includes the vat invoice or vat receipt website. 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 has been charged for you then it may be claimed back after you fill up the necessary vat reclaim form.
You should hire an excellent vat agent with complete knowledge of uk vat and eu vat rules so your vat refund claim is passed within the shortest time possible. You will have a time frame of 9 months following the end of the year or so once you had first paid your vat on those services or goods. You may use several online vat services provided by hmrc vat including filing online claims for vat refunds. You will need to register at the hmrc website before you can fill up the mandatory online vat form for vat reclaim. The form will then be forwarded to the member eu country where you might have paid vat initially, along with scans of vat invoices that you might have to affix to your application.
Once you get a confirmation usually within 15 days of receipt of your refund claim, it will require around 4 months for the 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 4 more months and hence it is vital to have it right the very 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 need to be converted into sterling pounds prior to it being 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 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.