If you are a vat registered trader in Britain then you would have to pay vat on most services and goods but are you aware that claiming vat back can improve your business cash flow? In case you have already paid vat once on any services or goods necessary 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 have adopted the system of vat or value added tax on movement of products and services as a means of collecting more revenue and plugging tax leaks. Great Britain too has shifted to vat and when you operate a business in Britain then you’ll have to apply for vat registration once your last Twelve month sales turnover touches ?70,000. As a vat registered trader you will need to pay and collect vat on all purchases and sales related to your company according to the classification of these goods and services according to 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 allow 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 can show documentary proof which 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 has been charged for you then these can be claimed back as soon as 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 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 year or so after 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 have to register at the hmrc website before you fill up the mandatory online vat form for vat reclaim. The form is then sent to the member eu country in which you may have paid vat initially, together with scans of vat invoices that you might have to affix to your application.
Once you get a confirmation usually within 15 days of receipt of your refund claim, it will require around 4 months for the claim to be approved from that member country before you can get your vat back. In case any additional clarification or documents are needed then you should expect a delay of four more months and therefore it is vital to have it right the very first time itself. Your vat refund may be deposited in a banking 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 changed into sterling pounds before it can be transferred into your UK banking 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 inform you about the status of your applications. The fact is that claiming vat back can certainly improve your business income by pumping back that double-taxed amount back into your business.