Reclaiming VAT in the UK: how does it work?

After finalizing the EU VAT refund requests for 2021 (the deadline for which was Sept. 30), we are now proceeding directly with the refund requests for the UK. Because of the Brexit, the process for these refund requests is no longer the same as for refunds within the EU. We explain this further below.

New process and additional requirements

Because the UK is no longer part of the EU, refund claims in the UK are subject to different rules than for EU member states. This has both advantages and disadvantages.

Refund requests must be submitted through a separate channel directly to the UK tax authorities.
It is not possible to use the EU portal for this purpose. The advantage of this is that no separate login code for the EU portal is required (for the UK refund requests). The disadvantage is that all invoices must be processed and reported separately for the UK VAT refund.

Refund requests must be submitted not by calendar year, but for the period July 1 to June 30.
The disadvantage of this is that when collecting and processing the invoices and expenses, the refund periods are different for the UK and the EU, and this may affect accounting and administration. However, the advantage is that the deadline for filing in the UK is December 31. In our experience, the EU deadline of September 30 is often very busy, but since all invoices will be collected and processed by then anyway, this (hopefully) gives a little more time and space for the refund claim in the UK.

Despite earlier reports, it is not (yet) possible to file the refund claim electronically in the UK. The UK tax authorities only accept hard-copies.
The downside of this is that the processing of the request may take a little longer, and there is a chance that requests or documents may not arrive properly or get lost. The good news is that we can, of course, use the VAT4U software to prepare all refund requests.

Not only must the request be submitted on paper, but also all (copies of) purchase invoices must be included.
This means that in order to submit a request, we need all original paper or electronic invoices. We need to collect these and send them by post to the UK tax authorities (HMRC). So keep this in mind if you want to reclaim VAT in the UK: you need the original receipts and invoices!

Finally, the UK tax authorities ask for proof that the person claiming the VAT refund is a VAT entrepreneur.
For this purpose, a so-called 'certificate of taxable status' must be sent along with the refund application. This must be requested by the entrepreneur himself from the Dutch Tax Authorities. You can call the Tax Information Line and ask for a 'Hoedanigheidsverklaring' or 'Certificate of Taxable Status for VAT'. It is preferable to request an English version (you must specifically ask for this from the Tax Information Line).

Requirements at a glance:

Hard-copy request
Hard-copy of (copy) purchase invoices
Certificate of Taxable Status
Deadline: Dec. 31, 2022 (for the period July 1, 2021 - June 30, 2022)

If you already have a (normal) VAT registration in the UK, then of course a separate refund request is not necessary. You can then deduct all UK VAT charged to you on business expenses in your UK VAT return (obviously taking into account possible deduction restrictions on certain types of expenses).

Hard-copies

In particular, the requirement to include the hard-copy invoices makes the process a bit more cumbersome for some businesses. Many companies work with software to process expense reports where the employee is not always required to keep the original invoice. For reclaiming VAT, this invoice is required. The annoying thing is: without an invoice or receipt, no VAT refund!

Entrepreneurs miss out on a lot of money. That's a shame. Make sure you have a good process for processing your purchase invoices and expense receipts. Check that the VAT charged on these invoices and receipts is justified and that the invoice or receipt meets the formal requirements. And make sure you file the refund request in a timely manner.

We can help you with that. Feel free to contact us, for example by booking an appointment directly through our website.