A blog about local and foreign VAT matters, best practices, and tips from practioners.

The UK is one of the oldest trading nations with the history tracing back all the way to the 18th century. One of the biggest economies of the world, today it’s a bustling business hub.

Countless industries make it a foreign travel hotspot. With the service industry contributing to around 80% of the GDP. It is a given as to how much amount of business travel takes place in the country. It also has the highest number 0 rated goods and services (goods and services that are charged 0% VAT) in the European Union making it a perfect place to hold seminars, meetings & event for any business. But now that the UK is moving out of the European union. Let’s see whats held in store for us but that’s for another article.

Also playing in its favor is the 8th and 13th directive. The 8th directive adopted lets companies apply within the EU where everything is  online for the claim and the 13th directive handles all the offline claims outside of the EU, which is what companies who do not have their registered offices based in the UK need to follow, making it substantially easy for companies to apply and reclaim the VAT they incurred on foreign travel.

To make sure that your company does not miss out on the deadlines there are some things that need to be prepared and filed.

The standard VAT rate in the UK is 20%, but there are some business activities that are taxed at a reduced rate of 5%. Provided that all of the below-listed criteria are met, getting full VAT refund should be a breeze.

  • Your business cannot be VAT-registered in the UK
  • You cannot have a place of business or another residence in the UK
  • You cannot manufacture any supplies in the UK (there are a few exceptions)

Once the criteria for eligibility are met the next step becomes to get all the following documentation into place.

  • Your application must be made on Form VAT 65A with every invoice listed on the form.
  • Your application must cover a period of 12 months (starting 1st July 2016 and ending June 30th, 2017) for which your claim must exceed £50. OR
  • Your application must cover a period of 3 consecutive months for which your claim must exceed £400.
  • The application must be submitted in full no later than the 31st of December.
  • The refund is usually made within 6 months of your application being approved.
  • If your claim is rejected you will get some time to request a review.

Each application must be accompanied by the following documents:

  • Original VAT invoices or proof of VAT paid
  • A valid certificate of registration from your country stating that your business is registered in your country. The certificate should contain:
    • The name, address and official stamp of the authorizing company
    • The claimant’s name and address
    • Nature of the business conducted
    • The business registration number.

This is where the handling becomes tricky. Not the easiest thing in the world, VAT reclaims are usually better handled by professionals can better comprehend taxation laws of a different country. While choosing a third-party vendor to handle your company’s VAT return more than anything one looks for transparency. Companies like CB VAT setup escrow accounts that ensures that your company gets the refund right on time every time.

An industrial manufacturing company lost approx. €1M just because they missed out on the deadline for VAT return. As the December deadline approaches to file for VAT, one needs to keep in mind the various utilisations of the reclaimed money that can take place and make sure that it’s done on time. 

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