It is the right of the taxpayer to recover VAT they incur as this opportunity offers the business a chance to make some savings. All registered VAT companies should submit a VAT return to HMRC on a quarterly basis. This is to show the amount you charged your clients and recover VAT for goods and services you bought.
To make the VAT recovery process easier you will need;
- VAT Return form.
- Valid VAT receipts. These receipts should have VAT numbers for goods and services that are to be claimed.
In order for VAT recovery to take place, you will need to file the VAT Return form, claiming the VAT incurred. HM Revenue and Customs will go through the eligibility of your claim and if approved, issue a VAT refund in a span of 30 days from the date of filing.
To support your VAT Recovery claim you must:
Store All your VAT Records
Put together all VAT receipts for business-related purchases only. Items such as second-hand goods, business entertainment, and vehicles are not eligible for one to access their VAT Recovery funds.
VAT invoices must have some requirements and stored for at least 6 years. These include:
- Date invoice was issued.
- Identification number of the invoice.
- Name and address of the company.
- Company VAT registration number.
- Name and address of the client.
- Client VAT registration number.
- Description and quantity of goods and services.
- Supply and payment date.
- Price together with VAT.
- Price Exclusive of VAT.
Work out the total VAT that is due by completing your VAT returns. If third party software the form is found to be eligible by HMRC you will be able to access your VAT refund. Sum up your total VAT charged to your clients owed on purchases in other countries to find out your total VAT that is due.
In addition, calculate reclaimable VAT. This is by totaling amount of VAT paid on the eligible VAT of business purchases. Sum up the VAT totals on your valid receipts and invoices to find the total of the reclaimable VAT. If the total is more than your due VAT, HMRC will give you a refund.
Once completed, sign in to the HMRC website or a and submit your VAT return. If they owe VAT, you will be given a refund.
Points Of Consideration
The standard rate of the VAT is 20% on taxable items. However, there are some goods that are zero-rated, while others are at a reduced rate of 5%.
There is a difference between exempt items and zero-rated items. The best option is to involve the services of an accountant or audit firm. They are able to determine specific rates in regards to your VAT recovery situation, especially in regards to non-taxable items (exempt supplies).
Companies that make zero-rated supplies are eligible for recovery of input tax contrary to those that don’t.
If annual turnover of your company exceeds 82,000 pounds you must be VAT registered. It’s the law. If it is less than the stipulated amount, you can choose to register your business voluntarily. You will still recover VAT paid.
There are numerous service providers offering VAT recovery services to businesses all across the country and they will be of immense help.