If you import goods into the UK from eu countries where vat has already been paid on the same or utilize vat-applicable services in those countries then you should apply for vat uk refund to claim previously paid vat. You can apply for vat refunds online and can certainly reduce your business costs with each successful refund.
Although vat has been established to avoid the problem of double taxation, it can occur in case you import goods into the UK after vat has already been charged in that country on the same. On the other hand, your employees might visit trade fairs, trade shows, attend meetings with clients, spend money on promotional events and utilize other services where vat might have been charged. In case you have to pay uk vat again on those goods or do not get vat reclaim for services then this would amount to double-taxation and raise your business costs to a large extent.
In the UK, Her Majesty’s Revenue and Customs or hmrc vat department that enforces vat allows you to reclaim VAT paid in another country by submitting the applicable online vat form. However, you need to be an existing registered vat trader before you can use these services. You will need to register with hmrc before you can start using all the vat online services on offer. You can register your business and even authorise your vat agent to represent you while filing vat returns and for vat refunds since the process of receiving vat refunds back into your bank account could last between 4 to 8 months.
You will need to apply for a vat uk refund to hmrc vat by filling up the online form and also need to attach soft copies of all relevant documents such as vat invoices and vat receipts. In addition, the vat department of the country of origin where vat was originally paid might also ask for clarifications, which in turn could lengthen the refund process to a maximum of around 8 months. In case your application is approved without any problem then you could receive your refund within 4 months. It would thus make more sense to allow your vat agent to handle the vat refund process by paying a fixed percentage of successful refunds.
Once your vat reclaim process is successfully processed then you will receive the vat amount originally paid back into your bank account. However, that amount would be in the currency of the country of origin and you might need to convert that amount into GBP before utilizing it. Since standard rates of vat range from 15% to 25% in all eu countries that have adopted vat, it will surely boost up your cash flow and profit margins if you manage to recover the original vat amount back into your own account. Paying your vat agent only after you receive your vat refund amount will also lower your financial burden.
While vat offers you a chance to save on taxes by passing the vat amount to the final customer, it can raise your costs in case you have already paid on goods or services in another eu country. If you want regular cash inflows into your bank account and want to compete with your competition then you should certainly apply for vat uk refund to claim previously paid vat.