If your business is based in the UK and you import goods or services from member eu countries that levy vat before import of the same, then you will need to apply for VAT refund on imports to significantly lower costs. Compared to vat refunds for casual travelers, which is quite straightforward, reclaiming paid vat for businesses is time consuming and requires help from vat professionals.
All eu countries that follow the system of vat follow directives issued by the European Commission. The EC has issued eu vat rules that are interpreted by all eu countries before being issued in their own country. Thus, in the UK you will need to abide by uk vat rules issued by the UK vat department managed by Her Majesty’s Revenue and Customs or hmrc. If you have crossed over the vat threshold limit of £70,000 of taxable sales in the previous 12 months and turned into a vat registered trader in the UK then you can now apply for vat reclaim on any import of goods from any eu country where vat has already been paid on the same.
The basic principle of vat is to do away with the problem of double taxation and if the goods that you have imported into the UK have already been taxed in the country of origin then your product costs would certainly rise and make it difficult for you to compete within the market. On the other hand, if your employees need to attend trade shows or exhibitions in eu countries that levy vat on such services then you can apply for a vat refund for vat applied on such services too. You should remember that you will need to supply proof in the form of vat invoices or vat receipts so as to determine that exact vat rates that you have already paid, before your claim is successfully processed by hmrc and the vat department of the concerned country.
Since each vat claim could take between 4 to 8 months to process, it would be better if you allow your vat agent to handle all the virtual paperwork since you will anyway need to make an online application to hmrc. You can apply by filling out an applicable vat form for vat refund online after you register for vat online services offered by hmrc. Once your vat agent has applied for a vat refund then hmrc, in turn, will forward your application along with all documentary proof attached, to the country of origin where the vat amount was initially paid. If all your documents are in order then you might receive your vat amount back into your bank account within 4 months but in case of any additional query then you will need to wait for a total of 8 months for your money to get deposited into your account.
Your vat agent can follow up on all your vat claims in return for a percentage of those amounts. You need not invest any money initially even as this arrangement spurs your vat agent to try harder for successful vat reclaims. This will allow you to concentrate on your business as each successful vat refund will lower your costs significantly while improving your cash flow at the same time.