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Claiming vat back can improve your business cash flow


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If you’re a vat registered trader in Britain you would then have to pay vat on many services and goods but did you know that claiming vat back can improve your business cash flow? In case you have already paid vat once on any services or goods required for your business or paid vat on it even in another eu country then you can certainly make 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 if you run a business vatverification in Britain then you’ll need to make an application for vat registration once your last 12 month sales turnover touches ?70,000. Being a vat registered trader you will need to pay and collect vat on all purchases and sales in connection with your company depending on the classification of those products or services as per the HM Revenue and Customs or hmrc vat department.

However, in order to avoid double taxation on such services and goods, the hmrc department has produced vat rules that will allow you to claim vat back on any services or goods purchased for the business. This amount may be recovered even if 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 to the UK after paying vat in the country of origin or have attended a trade fair in a foreign eu country where vat is charged for you then it may be claimed back as soon as you fill up the required vat reclaim form.

You should hire an excellent vat agent with complete understanding of uk vat and eu vat rules so that your vat refund claim is passed in the shortest time possible. You’ll have a time frame of 9 months after 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 offered by hmrc vat including filing online claims for vat refunds. You will need to register at the hmrc website before you fill the mandatory online vat form for vat reclaim. The form will then be forwarded to the member eu country in which you may have paid vat initially, together with scans of vat invoices that you might need to attach to the 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 the claim to be approved from that member country before you can get your vat back. In the event any additional clarification or documents are needed then you definitely should expect a delay of four more months and hence it is vital to have it right the first time itself. Your vat refund may be deposited in any banking account that you specify within or outside the UK. However, this amount will be in the currency of the country of origin and will need to be changed into sterling pounds before it can be transferred into your UK banking account.

Although the process to reclaim vat back is a bit tedious, an efficient vat agent can apply for vat refunds on your behalf and notify you about the status of the applications. The fact is that claiming vat back can certainly improve your business cash flow by pumping back that double-taxed amount back into your company.