As politicians like to remind us something like 50% of foreign UK trade is with the EU. So there is a good chance your small business buys goods or services from the EU.
If you are VAT registered in the UK you should always be able to reclaim VAT on these purchases. This can happen in one of two ways:
- By providing your VAT number to the supplier so that they can raise a zero VAT invoice via the Reverse Charge scheme.
- By subsequently reclaiming the VAT you were charged via the VAT EU Refunds scheme.
We’re focusing on the second here, which is what happens if you have paid for an invoice already and the supplier charged VAT at the relevant country of origin rate.
You cannot claim this VAT back via your standard quarterly return. Instead you must use a specific HMRC service that you have to register for using your HMRC Online gateway. If you’re already registered for VAT it will be easy to locate the link, it looks like this:
It will take a few weeks once you have enrolled for HMRC to send you a service activation code.
Then you are good to make a claim. You should bear in mind that there are minimum claims:
- 400 euro if your claim covers a period of more than three months but less than a year; and
- 50 euro if your claim covers a whole year or the remainder of a year (ie where your claim covers the whole period between the end of your last claim and the end of the year)
From there it’s just a case of following the instructions and making your claim.
How Caprica Online Accountants can help
At Caprica Online Accountants provide all the VAT advice our clients need as part of our great fixed fee online accounting packages.