If you’re a vat registered trader in Britain then you would need to pay vat on many services and goods but did you know that claiming vat back can enhance your business cash flow? In case you have already paid vat once on any services or goods required for your company or paid vat on it even in another eu country then you can definitely 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 way of collecting more revenue and plugging tax leaks. Great Britain too has moved to vat and if you run a company 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 need to pay and collect vat on all purchases and sales in connection with your company 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 services and goods, the hmrc department has produced vat rules that will allow you to definitely claim vat back on any goods or services purchased for your business. This amount may 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. In case you have imported goods to 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 it may be claimed back as soon as you fill up the necessary vat reclaim form.
You need to hire a proficient vat agent with complete understanding of uk vat and eu vat rules so 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 year or so after you had first paid your vat on those services or goods. You may use several online vat services provided by hmrc vat including filing online claims for vat refunds. You will have to register on the hmrc website before you fill the mandatory online vat form for vat reclaim. The form is then sent to the member eu country in which you might have paid vat initially, along with scans of vat invoices that you might have to attach to the application.
Once you receive a confirmation usually within 15 days of receipt of your 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 additional clarification or documents are required then you definitely should expect a delay of four more months and therefore it is vital to get it right the first time itself. Your vat refund can 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 to your UK banking account.
Even though 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 on the status of the applications. The reality is that claiming vat back can indeed enhance your business income by pumping back that double-taxed amount directly into your business.