If you’re 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 enhance your business income? In case 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 goods and services as a means of collecting more revenue and plugging tax leaks. Great Britain too has shifted to vat and when you run a business in Britain then you will need to apply for vat registration when 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 company depending on the classification of these products or 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 produced vat rules that will permit you to claim vat back on any goods or services purchased for your 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 which includes the vat invoice or vat receipt. If you have imported goods to the UK after paying vat in the nation of origin or have attended a trade fair in a foreign eu country where vat is charged for you then these can be claimed back as soon as you fill the required vat reclaim form.
You need to hire a proficient vat agent with complete knowledge 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 limit of 9 months following the end of the calendar year once you had first paid your vat on those services or goods. You may use several online vat services offered by hmrc vat including filing online claims for vat refunds. You will need to register at the hmrc website before you can 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, along with scans of vat invoices that you might need to attach to your application.
Once you receive a confirmation usually within 15 days of receipt of the refund claim, it will require around 4 months for your 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 therefore it is essential to have it right the 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 country of origin and will have to be changed into sterling pounds before it can be transferred to your UK banking 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 inform you about the status of the applications. The fact is that claiming vat back can indeed enhance your business cash flow by pumping back that double-taxed amount back into your business.