If you’re a vat registered trader in Britain then you would have to pay vat on many goods and services but are you aware that claiming vat back can improve your business cash flow? In case you have already paid vat once on any goods or services required for your company or paid vat on it in another eu country then you can definitely submit 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 if you run a company in Britain then you’ll have to apply for vat registration when 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 business 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 goods and services, the hmrc department has established 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. In case you have imported goods into 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 required vat reclaim form.
You should 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 frame of 9 months after the end of the year or so once you had first paid your vat on those goods or services. You can 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 fill up the mandatory online vat form for vat reclaim. The form is then forwarded to the member eu country in which you may have paid vat initially, along with scans of vat invoices which you may need to affix to your 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 other clarification or documents are needed then you should expect a delay of four more months and therefore it is vital to get it right the very first time itself. Your vat refund can be deposited in a banking account that you specify within or outside the UK. However, this amount will be in the currency of the nation of origin and will need to be converted into sterling pounds prior to it being 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 as your representative and notify you about the status of the applications. The fact is that claiming vat back can indeed enhance your business income by pumping back that double-taxed amount directly into your business.