If you are a vat registered trader in the UK then you would have to pay vat on most goods and services 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 necessary for your company or paid vat on it even in another eu country then you can certainly make 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. The UK too has shifted to vat and if you operate a business in the UK then you will have to apply for vatcontrol vat registration once your last Twelve month sales turnover touches ?70,000. As a vat registered trader you will need to pay and collect vat on all purchases and sales related to your business depending on the classification of those 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 can 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 in a foreign eu country where vat has been charged for you then it may be claimed back after you fill up 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 within the shortest time possible. You’ll have a time frame of 9 months after 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 fill up the required online vat form for vat reclaim. The form is then sent to the member eu country in which you might have paid vat initially, together with scans of vat invoices that you might have to affix to the application.
Once you receive a confirmation usually within 15 days of receipt of the 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 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 very first time itself. Your vat refund can be deposited in a bank account that 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.
Although the process to reclaim vat back is a little 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 indeed improve your business income by pumping back that double-taxed amount back into your company.