Value Added Tax, or VAT, is added to certain goods and services sold in the U.K. In certain situations, it may be possible to recover VAT that has been paid on materials used for businesses. VAT recovery takes place by filing a VAT return and claiming the VAT back on this form. HM Revenue and Customs then checks the eligibility of the claim and, if warranted, issues a VAT refund to the filer for the balance owed.
Gather VAT receipts for your purchases. Only business-related purchases qualify for VAT refunds. Certain items, such as cars not used entirely for business, business entertainments and second-hand goods, are not eligible for VAT refunds. VAT invoices must show a valid VAT number, an invoice number, the seller's name and address, the date and time of the invoice and an itemised list of goods.
Calculate your total VAT due by filling out your VAT return. This form is used to calculate the amount of VAT you owe and, if eligible, your VAT refund. Add your total VAT charged to customers to any VAT that you owe on purchases in other EU countries to calculate your total VAT due.
Calculate your reclaimable VAT by totalling the amount of VAT paid on your eligible VAT business purchases. Add the VAT totals on your eligible invoices and receipts to get the total reclaimable VAT. If this total is larger than your VAT due, then HMRC will issue you a refund.
Submit your completed VAT return online using the HMRC website (see Resources) or third-party tax software. If you are owed VAT, then you will be issued a refund.
Things you need
- VAT return form
- VAT receipts with valid VAT numbers for goods and services being claimed