How to claim Post-Brexit VAT refunds
To reflect changes to the current VAT refund process, HMRC has updated VAT notice 723A. It is most likely to relate to companies located in the UK that might be incurring EU VAT and companies from outside the UK that incur UK VAT.
UK businesses incurring EU VAT:
Since 1 January 2021, UK businesses can potentially reclaim VAT incurred in the EU. It is most likely to be the window for reclaiming EU VAT for earlier periods closed on or before 31 March 2021. The UK must now use the current processes for non-EU businesses following the end of the transitional period. The exact process might vary so that one can learn more about the official portal. To get a refund, UK businesses may need to provide a certificate of status.
Non-UK businesses incurring UK VAT:
Any company established outside the UK will be liable to UK VAT on UK purchases unless they are buying goods for exports. To reclaim the VAT, one needs to be registered or required or eligible to be registered in the UK and should not have any place of business nor make any supplies in the UK. If an equivalent scheme exists in the claimant’s EU country, then HMRC has confirmed that the use of the system will be refused.
Qualifying supplies:
VAT is likely to be reclaimed on goods and services purchased in or imported into the UK, but the scheme cannot be used to reclaim VAT if non – business supplies or goods and services are purchased to sell traveler’s benefits. With private use, usual restrictions for cars are applicable, and only the business element of the VAT incurred can be recovered where personal use of supply is considered.
Claims-
claims must be submitted by 31 December; they need to be made based on an annual period ending on 30 June, and of course, the claim needs to cover at least a three-month period, unless that is likely to pass on 30 June, in which case a shorter period might be acceptable. The claim can be filed using Form VAT65A as it shows the business is registered in their home country, which they need to accompany the initial application and must be given in at least one year.
The details of the original document include:
1. Business registration number.
2. Nature of the business.
3. Name, address, and stamp of the authorizing body.
4. Original invoice must include:
5. Rate of VAT applied.
6. VAT inclusive cost of the supply.
7. Date of the supply.
8. Supplier’s name, address, and VAT number.
Power of Attorney or letter of authority must be held even though one can appoint an agent d to complete the application. The SWIFT payment mechanism is suggested by HMRC even though other payment mechanisms are available. When an appeal is likely to be rejected, then one can request a review and appeal to an independent tribunal.
When supply exceeds £250, then invoice must include the following details:
VAT exclusive cost of the supply
identifying number
amount of VAT charged
VAT total cost of the collection.
