Getting VAT back on overseas expenses
This article will be of interest if you sell or buy services or goods in an overseas market.
In many situations if you are a UK based supplier (i.e. the companyproviding services to say EU customers, but delivering the services inthe UK, you could take on the task of obtaining UK VAT refunds forthose customers. This may offer you a competitive advantage?
Your business can only reclaim input tax on its VAT return if theexpenditure was incurred in the country in which it is VAT registered.For example, a UK company can only reclaim input tax on expenditurerelevant to other UK businesses. Overseas VAT is reclaimed as follows:
" countries within the EC - VAT can be reclaimed by submitting aclaim to the country in which the expenditure was incurred - this isknown as an 8th Directive claim
" countries outside the EC - many non-EC countries have their ownsystem of indirect taxes e.g. Australia has a tax called GST (Goods andServices Taxes). In many cases, a reciprocal arrangement will be inplace with the UK (Australia included) whereby claims can be madebetween the two countries in exactly the same way as 8th Directiveclaims. This procedure is known as a 13th Directive claim.
For example if your UK business incurred GST on a business trip toAustralia (not a trip to watch an Ashes cricket series!) you couldsubmit a claim to the Australian authorities to recover this tax.Equally, an Australian business registered for GST could submit a claimto the UK to recover any relevant VAT paid in the UK.
You can find further information from the HMRC website.
If you do trade overseas, are an existing client and would like todiscuss any of these issues in more detail please call your PersonalAccountant.