If you’re a vat registered trader in the UK you would then have to pay vat on most goods and services but did you know that claiming vat back can enhance your business cash flow? If you have already paid vat once on any goods or services necessary for your company or paid vat on it in another eu country then you can certainly 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 way of collecting more revenue and plugging tax leaks. The UK too has moved to vat and if you run a company in Britain 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 have to pay and collect vat on all purchases and sales related to your company depending on the vatcontrol classification of these products or services as per 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 permit you to claim vat back on any services or goods purchased for the 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 which includes the vat invoice or vat receipt. If 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 to you then these can be claimed back as soon as you fill the necessary vat reclaim form.

You need to hire a proficient vat agent with complete knowledge of uk vat and eu vat rules so that 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 year or so once you had first paid your vat on those goods or services. You may use several online vat services offered by hmrc vat including filing online claims for vat refunds. You will need to register on the hmrc website before you fill the mandatory online vat form for vat reclaim. The form will then be forwarded to the member eu country where you may have paid vat initially, along with scans of vat invoices that you might have to attach to your application.

Once you get a confirmation usually within 15 days of receipt of the 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 other clarification or documents are required then you should expect a delay of four more months and therefore it is vital to get it right the first time itself. Your vat refund may be deposited in a bank 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 converted into sterling pounds before it can be transferred into your UK banking account.

Although the process to reclaim vat back is a little tedious, an efficient vat agent can apply for vat refunds on your behalf and inform you about the status of the applications. The reality is that claiming vat back can certainly improve your business cash flow by pumping back that double-taxed amount directly into your business.