Claiming vat back can improve your business cash flow

If you are a vat registered trader in the UK you would then need to pay vat on most services and goods but did you know that claiming vat back can enhance your business income? If 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 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 moved to vat and when you operate a company in the UK then you’ll have to apply for vat registration once 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 business according to the classification of those 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 goods or services purchased for your business. This amount can be recovered even if 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 into the UK after paying vat in the nation of origin or have attended a trade fair inside a foreign eu country where vat has been charged to you then it may be claimed back as soon as you fill up the required 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’ll have a time limit 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 the required online vat form for vat reclaim. The form is then forwarded to the member eu country in which you may have paid vat initially, together with scans of vat invoices that you might 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 case any additional clarification or documents are needed then you should expect a delay of 4 more months and hence it is vital to have it right the first time itself. Your vat refund can be deposited in any banking 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.

Even though the process to reclaim vat back is a bit tedious, a competent 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 cash flow by pumping back that double-taxed amount directly into your company.