If you are a vat registered trader in Britain then you would need to pay vat on most goods and services but are you aware that claiming vat back can improve your business cash flow? In case you have already paid vat once on any services or goods necessary for your business or paid vat on it in another eu country then you can definitely submit an application for a vat refund.
Most eu countries now utilize 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. Great Britain too has moved to vat and when you operate a business in the UK then you’ll need to make an application for vat registration once your last 12 month sales turnover touches ?70,000. As a vat registered trader you will have to pay and collect vat on all purchases and sales related to your business depending on the classification of these products or 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 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. In case you have imported goods into the UK after paying vat in the country of origin or have attended a trade fair inside a foreign eu country where vat is charged for you then these can be claimed back after you fill up the required 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 in 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 provided by hmrc vat including filing online claims for vat refunds. You will have to register at the hmrc website before you can 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 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 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 get it right the first time itself. Your vat refund may be deposited in any bank account that you specify within or outside Britain. However, this amount will be in the currency of the country of origin and will need to be changed into sterling pounds before it can be transferred into your UK bank account.
Although the process to reclaim vat back is a little tedious, a competent vat agent can apply for vat refunds on your behalf and notify you about the status of your 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 company.