Claiming vat back can improve your business cash flow

If you’re a vat registered trader in Britain you would then need to pay vat on many goods and services but are you aware that claiming vat back can enhance your business income? If you have already paid vat once on any services or goods necessary for your business or paid vat on it even in another eu country then you can certainly submit an application for a vat refund.

Most eu countries now utilize 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. Great Britain too has shifted to vat and when you operate a company in Britain then you will need to apply for vat registration when your last Twelve 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 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 goods or services purchased for your business. This amount can be recovered even though 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 to 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 for 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 frame of 9 months after the end of the year or so once you had first paid your vat on those services or goods. 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 will then be forwarded to the member eu country in which you might have paid vat initially, together with scans of vat invoices which you may have to affix to the application.

As soon as you receive 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 additional clarification or documents are required then you definitely should expect a delay of four more months and therefore it is vital to get it right the very first time itself. Your vat refund can be deposited in a bank account which you specify within or outside the UK. However, this amount will be in the currency of the nation of origin and will need to be converted into sterling pounds prior to it being 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 on your behalf and notify you on 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 directly into your business.