One of the most common questions we are asked by our overseas clients when they are looking to do business in the UK is – “Can we recover the VAT we incur in the UK?”
In many cases, the answer is “yes”; however, there are strict conditions and time limits that must be met.
Who can make a reclaim?
Any business established in a non-EU jurisdiction that incurs VAT in the UK and which:
- is not VAT registered or liable to be registered for VAT in the UK;
- does not have a place of business or residence in the EU; and
- does not make any supplies in the UK.
How much VAT can be reclaimed?
This UK scheme allows businesses to reclaim VAT on most expenses incurred for business purposes. However, the same restrictions that apply to UK VAT registered business will also apply to claims by overseas businesses.
Non-refundable VAT includes:
- Any supply used or to be used to make a supply in the United Kingdom.
- The supply or importation of most ordinary business cars. Only 50% of the VAT incurred on the lease of a car for mixed business and private purposes is allowed.
- Certain second-hand goods, such as cars and antiques for which no tax invoice will be issued.
- Business entertainment/hospitality expenses.
- Supplies used to support exempt or non-business activities (although partial recovery may be available).
Valid VAT invoices must be included to support the claim.
A Certificate of Tax Status must also be submitted with the claim. It is important to note that HMRC have recently had a change of policy and are taking a much stricter approach to the information that must be included on the certificate. Failure to submit a claim with a certificate that contains all the specified information will result in the claim being rejected.
What is the deadline for making the claim?
The next claim in the UK covers the period from 1st July 2017 to 30 June 2018 and the strict deadline for submission of the claim to HMRC is 31st December 2018. However, as this due date falls on a Monday, we would recommend claims are submitted to HMRC on or before the 28th December 2018.
How can we help?
AAB’s Indirect Tax team will ensure that your claim is accurate and complete at the outset, avoiding time-consuming queries from the tax authority. We will manage the process from start to finish, leaving you more time to manage your business while we secure the refund on your behalf.
Finally, another consideration is whether an overseas customer should have incurred the VAT in the first place. HMRC have a strict policy of rejecting claims where VAT has been charged in error. As part of our review, we will identify incorrectly charged VAT and assist you in securing a refund direct from the supplier. Importantly, the one-year deadline set out above does not apply in such circumstances and a refund going back 4 years can be obtained.
If you require further information or support with the submission of a UK 13th Directive VAT claim, please contact Debbie Smith, Indirect Tax Assistant Manager (firstname.lastname@example.org) or your usual AAB contact.