United Kingdom VAT Reclaim for NON EU businesses

 

General Non-EU businesses (13th Directive)

U.K. VAT is known as “Value Added Tax” (VAT).

Goods and services supplied to or from the Isle of Man are regarded as having been supplied within the U.K. The Channel Islands are not part of the U.K. or the EU for VAT purposes.

Refund Eligibility

If the claimant is registered for business purposes in a non-EU country, it can use the 13th Directive procedure to reclaim VAT paid in the U.K., provided the claimant:

  • Is not registered, liable or eligible to be registered for VAT in the U.K.;
  • Do not have a place of business or other residence in the EU; and
  • Does not make any supplies in the U.K. (other than transportation services related to the international carriage of goods or services where VAT is payable by the person in the U.K. to whom the supply is made.

Non-refundable VAT

The scheme to reclaim VAT cannot be applied on:

  • Non-business supplies (although if a supply covers both business and non-business use, VAT can be reclaimed on the business element of the supply);
  • A supply used or to be used to make a supply in the U.K.
  • The supply or importation of most ordinary business cars; only 50% of the VAT incurred on the hire of lease of a car for mixed business and private purposes is allowed;
  • Certain second-hand goods, such as cars and antiques, for which a tax invoice is not issued;
  • Business entertainment/hospitality expenses;
  • Exports of goods (although these will be zero-rated provided the supplier has the necessary evidence); or
  • Goods and services, such as hotel accommodation, purchased for resale and which are for the direct benefit of travellers; and
  • Any supply used or to be used to make an exempt supply outside the U.K. (for this purpose, an exempt supply is a supply described as exempt in Schedule 9 to the VAT Act 1994, whether or not the place of the supply is in the U.K.).

If the claimant has to arrange for goods to be imported into the U.K., it can reclaim any VAT due, provided there is no other VAT relief available at import, but the scheme cannot be applied if, as a result of importing the goods, the claimant becomes liable to register for VAT purposes in the U.K.

Minimum amounts GB Business

If the application is for a period covering less than 12 months, the total amount of VAT claimed must not be less than GBP 250. However, when the application is for the full 12 months of the prescribed year, or there are less than three months remaining in the prescribed year, the amount of VAT claimed must not be less than GBP 250.

Time limits

The application must cover a period of not less than three consecutive calendar months (e.g. from 1 July to 30 September) of the prescribed year and not more than a prescribed year. The prescribed year is the 12 month period from 1 July to 30 June (but for other EU countries the claim period is 1 January to 31 December of the previous year).

However, applications may relate to a period of less than three months where the period represents the remainder of a prescribed year (e.g. from 1 May to 30 June). Such applications may also relate to invoices or import documents not covered by previous applications that concern transactions completed during that year. The application must be submitted to the U.K. tax authorities within six months of the end of the calendar year in which the tax became chargeable, i.e. by 31 December.

An extension of this deadline is not possible.

Supporting documentation

The following documents must be submitted with each application:

  • Original VAT invoices or proof of import VAT paid (copies are accepted if the originals are lost and the copies are certified by the supplier). The invoice number as used in the application form must be included on the documents;
  • A valid certificate from the officials of the claimant’s country showing that it is registered for business purposes in that country. When the certificate is applied for, it is recommended that all information the U.K. authorities will need to process the application be included. For example, if the invoices are made out in the claimant company’s trading style, the certificate must show this as well, as the name of the person registered.

The certificate must contain:

  • The name, the address and official stamp of the authorizing body;
  • Name and address of business claiming;
  • The nature of the business; and
  • The business registration number.

An original certificate must be provided (a photocopy is not acceptable). The certificate is valid for one year, so once the certificate has expired, a new one will have to be obtained to submit with any subsequent applications.

IMPORTANT: Certificate must be currently date stamped for authentication by the authorities.

If the application is rejected, the grounds for rejection will be provided. An appeal against a rejection may be made to the U.K. tax authorities (for review by an independent officer) within 30 days of the date of the rejection letter. The appeal should be sent to the address provided in the rejection letter. If, following this process, the decision to reject the claim is upheld, the decision can be appealed to the independent VAT Tribunal.

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