If you are a vat registered trader in the UK you would then have to pay vat on most goods and services but did you know that claiming vat back can improve your business income? In case you have already paid vat once on any services or goods required 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 products and services as a way of collecting more revenue and plugging tax leaks. The UK too has shifted to vat and when you operate a business in Britain then you will have to apply for vat registration once 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 these goods and services as per 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 definitely 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 are able to show documentary proof which 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 for you then it may be claimed back as soon as you fill up the required vat reclaim form.
You should 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 can 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 can fill up the required online vat form for vat reclaim. The form will then be forwarded to the member eu country where you might have paid vat initially, together with scans of vat invoices which you may have to attach to your application.
As soon as you receive 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 required then you should expect a delay of four more months and hence it is vital to get it right the first time itself. Your vat refund can be deposited in any bank account which 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 prior to it being transferred to your UK bank 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 about the status of the applications. The fact is that claiming vat back can certainly improve your business cash flow by pumping back that double-taxed amount back into your company.