If you’re a vat registered trader in Britain then you would have to pay vat on most 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 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 goods and services as a means of collecting more revenue and plugging tax leaks. Great Britain too has shifted to vat and when you operate a business in Britain then you will 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 need to pay and collect vat on all purchases and sales in connection with your company according to the vatcontrol.com classification of those goods and services according to the HM Revenue and Customs or hmrc vat department.
However, to prevent double taxation on such goods and services, the hmrc department has established 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 if 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. In case you have imported goods to the UK after paying vat in the country of origin or have attended a trade fair in a foreign eu country where vat is charged to you then these can be claimed back after you fill up the required vat reclaim form.
You need to hire an excellent 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 will have a time limit of 9 months after the end of the calendar year once you had first paid your vat on those services or goods. You can use several online vat services provided by hmrc vat including filing online claims for vat refunds. You will need to register on the hmrc website before you can fill the mandatory online vat form for vat reclaim. The form is then forwarded to the member eu country where you might have paid vat initially, along with scans of vat invoices that you might have to attach to your application.
Once 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 the event any other clarification or documents are required then you definitely should expect a delay of 4 more months and hence it is essential to have it right the very first time itself. Your vat refund can be deposited in a 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 before it can be 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 on your behalf and notify you about the status of the applications. The reality is that claiming vat back can certainly enhance your business income by pumping back that double-taxed amount back into your business.