If you’re a vat registered trader in Britain then you would need to pay vat on most goods and services but are you aware that claiming vat back can enhance your business cash flow? If 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 means of collecting more revenue and plugging tax leaks. Great Britain too has moved to vat and when you operate a company in Britain then you’ll need to apply for vat registration when your last 12 month sales turnover touches ?70,000. Being a vat registered trader you will have to pay and collect vat on all purchases and sales related to your company according to the vatcontrol classification of those products or services as per the HM Revenue and Customs or hmrc vat department.
However, to prevent double taxation on such services and goods, the hmrc department has established vat rules that will permit you to claim vat back on any services or goods purchased for the business. This amount may be recovered even though you have paid that vat in another eu country that follows vat, provided you are able to show documentary proof that 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 has been charged to you then it may be claimed back after you fill up the necessary vat reclaim form.
You need to hire a proficient vat agent with complete knowledge of uk vat and eu vat rules so your vat refund claim is passed within 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 may use several online vat services provided by hmrc vat including filing online claims for vat refunds. You will have to register at the hmrc website before you can fill up the required online vat form for vat reclaim. The form will then be sent to the member eu country in which you may 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 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 case any additional clarification or documents are required then you definitely should expect a delay of 4 more months and therefore it is vital to have 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 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 on the status of the applications. The reality is that claiming vat back can indeed enhance your business cash flow by pumping back that double-taxed amount directly into your business.