Claiming vat back can improve your business cash flow

If you’re a vat registered trader in the UK you would then have to pay vat on most goods and services but are you aware that claiming vat back can enhance 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 certainly make an application for a vat refund.

Most eu countries now utilize the system of vat or value added tax on movement of products and services as a way of collecting more revenue and plugging tax leaks. Great Britain too has moved to vat and when you operate a business vatverification in the UK then you’ll have to apply for vat registration once 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 related to your company according to the classification of those goods and services according to the HM Revenue and Customs or hmrc vat department.

However, in order to avoid double taxation on such services and goods, 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 if 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 to you then it may be claimed back after you fill the necessary vat reclaim form.

You need to hire a proficient vat agent with complete understanding 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 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 offered 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 mandatory online vat form for vat reclaim. The form will then be sent to the member eu country where you may have paid vat initially, together with scans of vat invoices which you may need to attach to your application.

Once you receive a confirmation usually within 15 days of receipt of your refund claim, it will take around 4 months for the claim to be approved from that member country before you can get your vat back. In case any other clarification or documents are required 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 any banking account that you specify within or outside the UK. However, this amount will be in the currency of the country of origin and will need to be changed into sterling pounds before it can be transferred into your UK bank 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 notify you about the status of the applications. The fact is that claiming vat back can certainly improve your business cash flow by pumping back that double-taxed amount directly into your company.