If you’re a vat registered trader in Britain you would then need to pay vat on many goods and services but did you know that claiming vat back can improve your business cash flow? In case you have already paid vat once on any services or goods required for your business or paid vat on it in another eu country then you can definitely submit an application for a vat refund.
Most eu countries now utilize 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 when you run a company in Britain then you will 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 have to pay and collect vat on all purchases and sales related to your company depending on the classification of these goods and services according to the HM Revenue and Customs or hmrc vat department.
However, to prevent double taxation on such goods and services, the hmrc department has established vat rules that will allow you to definitely 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 are able to show documentary proof which includes the vat invoice or vat receipt. If you have imported goods to 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 these can be claimed back after you fill the required vat reclaim form.
You need to hire an excellent 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 will have a time frame of 9 months following the end of the calendar year 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 required online vat form for vat reclaim. The form is then sent to the member eu country where you might have paid vat initially, along with scans of vat invoices which you may need to attach to your application.
As soon as you get a confirmation usually within 15 days of receipt of the 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 other clarification or documents are needed then you should expect a delay of 4 more months and therefore it is essential to get it right the very first time itself. Your vat refund may be deposited in a banking account which 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 changed into sterling pounds before it can be transferred to your UK banking account.
Although the process to reclaim vat back is a bit tedious, a competent vat agent can apply for vat refunds on your behalf and inform you on 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 directly into your business.