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Claiming vat back can improve your business cash flow


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If you are a vat registered trader in Britain you would then need to pay vat on many goods and services but are you aware that claiming vat back can enhance your business cash flow? If you have already paid vat once on any goods or services required for your company or paid vat on it in another eu country then you can definitely submit an application for a vat refund.

Most eu countries now utilize the system of vat or value added tax on movement of products and services as a means of collecting more revenue and plugging tax leaks. Great Britain too has shifted to vat and when you run a company in the UK then you will have to apply for vat registration once your last 12 month sales turnover touches ?70,000. As a vat registered trader you will need to pay and collect vat on all purchases and sales related to your business according to the classification of those goods and services as per the HM Revenue and Customs or hmrc vat department.

However, to prevent double taxation on such services and goods, the hmrc department has produced vat rules that will permit you to definitely claim vat back on any goods or services purchased for the business. This amount can be recovered even though you have paid that vat in another eu country that follows vat, provided you can show documentary proof that includes the vat invoice or vat receipt. If you have imported goods into the UK after paying vat in the country of origin or have attended a trade fair inside a foreign eu country where vat has been charged for you then these can be claimed back as soon as you fill the necessary vat reclaim form.

You should hire a proficient vat agent with complete knowledge of uk vat and eu vat rules so your vat refund claim is passed in the shortest time possible. You will have a time frame of 9 months following the end of the year or so after you had first paid your vat on those goods or services. You can use several online vat services provided by hmrc vat including filing online claims for vat refunds. You will have to register on the hmrc website before you can fill up the required online vat form for vat reclaim. The form will then be sent to the member eu country in which you might have paid vat initially, along with scans of vat invoices that you might need to attach to your application.

As soon as you get a confirmation usually within 15 days of receipt of the refund claim, it will require around 4 months for your claim to be approved from that member country before you can get your vat back. In case any other clarification or documents are needed then you should expect a delay of four more months and therefore it is vital to get it right the first time itself. Your vat refund can be deposited in a bank account which you specify within or outside the UK. However, this amount will be in the currency of the country of origin and will have to be changed into sterling pounds before it can be transferred into your UK bank account.

Even though the process to reclaim vat back is a bit tedious, an efficient vat agent can apply for vat refunds as your representative and inform you on the status of your applications. The fact is that claiming vat back can certainly improve your business income by pumping back that double-taxed amount back into your company.