Claiming vat back can improve your business cash flow

If you are a vat registered trader in the UK then you would need to pay vat on most goods and services but did you know that claiming vat back can improve your business cash flow? If you have already paid vat once on any goods or services required for your business or paid vat on it even in another eu country then you can certainly make 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 means of collecting more revenue and plugging tax leaks. The UK too has shifted to vat and if you run a business in the UK then you will need 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 business depending on the classification of those goods and services as per 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 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 can show documentary proof that 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 in a foreign eu country where vat has been charged to you then these can be claimed back after you fill up the required vat reclaim form.

You should hire a proficient vat agent with complete knowledge of uk vat and eu vat rules so that 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 calendar year after you had first paid your vat on those goods or services. You can use several online vat services offered by hmrc vat including filing online claims for vat refunds. You will need to register at the hmrc website before you can fill up the required online vat form for vat reclaim. The form is then forwarded to the member eu country where you might have paid vat initially, along with scans of vat invoices that you might have 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 your claim to be approved from that member country before you can get your vat back. In case any additional clarification or documents are required then you should expect a delay of 4 more months and hence it is vital to get it right the first time itself. Your vat refund can be deposited in any bank 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 converted into sterling pounds before it can be transferred into your UK bank 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 on the status of your applications. The fact is that claiming vat back can indeed improve your business cash flow by pumping back that double-taxed amount back into your business.