EU businesses visiting the UK - getting VAT refunds

If you buy goods or services for your business in the UK, you may have to pay VAT on them. You may be able to reclaim the VAT you paid in the UK if you're VAT-registered in your own EU country, and bought the goods or services to use in your business.

You can't reclaim it from your own tax authority but there's a Refund Scheme that you might be able to use to reclaim it from the UK. What you can reclaim depends on the UK's rules for claiming input tax. This guide explains who can use the Refund Scheme, what you can and can't claim under the scheme, how to make a claim and how you'll be paid.

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Who can use the Refund Scheme?

Anyone who's registered for VAT in an EU country can use the Refund Scheme to reclaim VAT paid in another EU country. This means that if you're VAT-registered in the EU, you can use the scheme to reclaim VAT you've paid in the UK on goods or services you've bought for your business.

You can only use the Refund Scheme if all of the following apply:

  • you're not VAT-registered in the UK and you don't have to be, or can't be, VAT-registered here
  • you don't have a place of business or other residence here
  • you don't make any supplies here

But if you do make supplies in the UK, you can still use the scheme if the only supplies you make here are either:

  • transport services related to the international carriage of goods
  • goods and services where the person you're supplying pays VAT on them

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What you can and can't reclaim

What you can reclaim VAT on

You can use the Refund Scheme for most other things that you buy in the UK for your business, including:

  • accommodation and meals
  • trade fairs
  • travel costs
  • car rental (but please note you can only reclaim 50 per cent of the VAT charged for hiring or leasing a motor car)
  • other goods and services you buy and use in the UK

Goods and services you can't use the scheme for

You can't use the Refund Scheme to reclaim VAT on goods or services you buy for resale. This might include things like hotel accommodation you buy to resell.

Also, you can't reclaim VAT on:

  • the purchase of a motor car
  • goods and services used for business entertainment
  • goods and services used for non-business activities

If your business makes both taxable and exempt supplies, you may not be able to recover all of the VAT you have been charged.

Imports

If you bring in goods to use in your business from outside the EU into the UK - these are called imports - you may have to pay VAT on the imports in the UK. You can use the Refund Scheme to reclaim the VAT you've paid on these imports unless you either:

  • get some other VAT relief when you import the goods
  • have to register for VAT in the UK because you have imported the goods

Find out about importing goods into the UK

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How to claim

You claim refunds of VAT paid in the UK by completing an online form and submitting it via your own tax authority.

You can make a refund claim yourself or you can use an agent, it's up to you. To be able to act for you and receive money on your behalf, your agent will need a letter of authority.

Example of a letter of authority HM Revenue & Customs will accept

'We [name, address and VAT registration number of business] hereby authorise [name and address of agent] to:

  • apply for VAT refunds on our behalf
  • receive all communications relating to VAT refunds
  • receive amounts of refunded VAT and/or interest on our behalf, and
  • lodge appeals on our behalf

We hereby undertake to repay any amounts wrongfully received.

This letter of authority cancels and replaces any previous letters of authority.

Date:

Signature:'

Time limits for making a claim

You must claim your refund no later than nine months after the end of the calendar year when you were charged the VAT. If you miss the deadline, you won't be able to make a claim for that year. So if you were charged the VAT in April 2009, you must claim a refund by 30 September 2010 at the latest.

Your claim can't be for a period of:

  • more than a calendar year
  • less than three months - unless that's all that's left of the calendar year

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How much you can claim

There's no limit to the maximum amount you can claim. But the UK has set the following minimum limits:

  • £295 where the claim is for less than a calendar year, but not less than three calendar months
  • £35 where the claim is for a calendar year, or the remainder of a calendar year

You can also include items missed on earlier claims so long as they related to VAT charged in the calendar year of the claim.

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Evidence needed for claims

As this is an online system, you don't need to send any paper invoices or other documents to HM Revenue & Customs (HMRC) when you submit your claim. But you must scan the invoice and attach it to your claim if the value on any invoice equals or exceeds:

  • £200 in the case of fuel
  • £750 for all other supplies

You must keep all of the original invoices and other documents supporting your claim. HMRC may ask to see original documents when they authorise your claim.

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Timescales for dealing with claims

You will receive confirmation, by email, when your claim has been received by HMRC. This may take up to 16 days from the date when you submitted the claim, but should normally be much sooner. Once you have received this confirmation, you should send any queries about the claim to HMRC, not to your own tax authority.

Find addresses and other contact details for HMRC (HMRC – the UK tax authority) in Notice 723A Refunds of VAT in the European Community for EC and non-EC business

HMRC must give you a decision on your claim within four months of receiving it. If they need further information, HMRC must ask you for this within the same four-month period, and you must provide the information within one month. HMRC will then have further time to consider your claim, but they must give you a final decision no later than eight months after they received your claim. If there is a refund due to you, they must pay this within:

  • four months and ten days of receiving your claim, where they have not asked for any further information
  • eight months and ten days of receiving your claim, where they have asked for further information and you have provided it within one month

If HMRC does not pay you within these timescales, you will be entitled to interest on the amount of the refund. The interest will be calculated at the rate which applies to traders in the UK, and will run from the date payment was due until the date payment is made.

Deadline for 2009 EU Cross-Border VAT Refund Claims

The deadline to submit 2009 EU VAT Cross-Border refund claims has been extended from 30 September 2010 to 31 March 2011.

A six month extension to the deadline, which was previously 30 September 2010, has been agreed because of technical problems with a number of other Member States' portals.

Please note: If you make a refund claim during this extended period the HMRC VAT EU Refund service will display the following warning message:

'The refund period start month cannot be before January of this year'.

Please ignore this message. Your claim will be processed and forwarded to the Member State of refund for consideration

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Payments

HMRC will make refunds by bank transfer, in pounds sterling. You can arrange the transfer to either a bank in the UK or in any other EU country, by entering the relevant bank account details when you complete your claim. If you have to pay bank charges on the transfer they may be deducted from the amount of your refund.

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If your claim is refused

You can help to ensure that your claim won't be refused by making sure:

  • your claim is submitted within the time limit
  • you have taken reasonable care when submitting it
  • where required, you have scanned and attached any supporting invoices

If your claim is refused HMRC will always tell you why. If you don't agree with HMRC's decision, you can either ask HMRC to review the decision, or you can appeal to an independent tribunal.

Read about what to do if you disagree with an HMRC decision

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Incorrect claims

If HMRC finds your claim isn't correct after the refund has been paid, they'll normally deduct any overpayment from your next refund.

If you've claimed too much, HMRC will get back the amount you've been overpaid by deducting it from the next refund, and you may incur a penalty for sending in an incorrect claim, so you do need to make sure your claim is right.

The UK authorities take a very serious view of false claims. They can recover any refunds obtained by a false claim and can charge you a penalty.

Find out more about penalties for incorrect claims

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More useful links

Read about VAT and international trade