Claiming vat back can improve your business cash flow

If you’re a vat registered trader in Britain you would then have to pay vat on most goods and services but are you aware that claiming vat back can improve your business income? If 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 moved to vat and if you operate a company in Britain then you will need to apply for vat registration once your last Twelve month sales turnover touches ?70,000. Being 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, to prevent double taxation on such goods and services, the hmrc department has produced vat rules that will permit you to claim vat back on any services or goods purchased for your business. This amount may be recovered even though 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. If you have imported goods into the UK after paying vat in the nation of origin or have attended a trade fair inside 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 should hire an excellent 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 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 at the hmrc website before you fill up the required online vat form for vat reclaim. The form will then be forwarded to the member eu country in which you might have paid vat initially, along with scans of vat invoices which you may have to attach to the application.

Once you receive a confirmation usually within 15 days of receipt of the refund claim, it will take 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 needed then you definitely should expect a delay of four more months and therefore it is essential to have it right the first time itself. Your vat refund can be deposited in any bank account which you specify within or outside Britain. However, this amount will be in the currency of the country of origin and will have to be converted into sterling pounds prior to it being transferred to 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 on the status of the applications. The reality is that claiming vat back can certainly improve your business income by pumping back that double-taxed amount back into your company.