VAT recovery in the United Kingdom : refunds for non-UK businesses

The UK VAT recovery for businesses established outside the United Kingdom is covered by the VAT Act 1994 and VAT Regulations1995 & 2020.

Foreign companies without VAT registration in the UK can claim back the VAT incurred on their local purchases, travel expenses and importations in the United Kingdom.

VAT recovery conditions in the United Kingdom

The overseas companies must meet several conditions for getting the UK VAT refund:

• Absence of VAT registration and of taxable supplies within the UK
• Absence of place of business and residence within the UK
• Allocation of expenses to non-exempted business supplies outside the UK
• Absence of VAT refund restrictions for UK businesses in the country of establishment of the claimant

The VAT incurred in the United Kingdom can be recovered on most categories of services and goods.

The following expenses give no rise to the VAT refund:

• Purchases for non-business activities
• Purchases for taxable supplies within the UK
• Business cars and related expenses for private use (50% refund for mixed use)
• Business entertainment or hospitality expenses (except for overseas customers)

Special rules apply for exporters, for travel agents and for purchasers of goods in the Northern Ireland.

Periodicity and time limits of VAT recovery in the United Kingdom

The UK VAT can be claimed back quarterly (min 130 £) or yearly (min 16 £).

The yearly VAT recovery period between July 1^st of the previous calendar year and June 30^th of the current calendar year gets prescribed for reclaim on December 31^st of the current calendar year.  

Thus, the VAT incurred in the United Kingdom in the period 01/07/2023 – 30/06/2024 must be claimed back latest on 31/12/2024.

Procedure of the VAT recovery in the United Kingdom

The are two ways of VAT recovery in the United Kingdom.

The UK VAT refund application can be filed electronically after a prior registration on the HMRC Tax portal.

Alternatively, it can be sent by post to the HMRC Tax Office.

Regardless the filing way, the application must include the following documents:

• VAT refund claim form VAT65A
• certificate of status of taxpayer issued by the country of establishment of the claimant
• original VAT compliant invoices
• other documents and information, such as Power of attorney for agents, etc.

The HMRC is issuing the decision within 6 months after the receipt of the VAT refund application. In case of additional information requests, this period can be extended. The rejection of the VAT refund application can been appealed within 30 days of the date of the decision.

Secure VAT recovery in the United Kingdom

There is no obligation for overseas companies to appoint a local tax representative or a tax agent for VAT recovery in the United Kingdom. But it’s important to pay attention when preparing and filing VAT refund applications, as the HMRC is applying penalties for errors and incorrect applications. It’s highly recommended therefore to be supported by a tax professional for any VAT reclaim in the UK.

BTOBNICE is accompanying businesses in their VAT recovery in the United Kingdom:

• Collection of eligible invoices and bills
• Correction of uncompliant invoices
• Recovery of unduly charged VAT
• Collection of accompanying documents
• Preparing VAT refund forms and applications
• Electronic or postal filing of VAT refund applications
• Follow-up on decisions and refunds
• Exchanges with HMRC

For more information and order, we invite you to contact our VAT expert : contact@btobnice.com