The 13th Directive Refund scheme is what businesses that are established outside of the EU will be able to use in order to reclaim VAT which has been paid in the UK. In other to use the scheme, the business must meet the following requirements:
- Not be registered, eligible to be registered or liable for VAT in the UK
- Not have a place of business or residence in the EU
- Not make any supplies in the UK other than transportation services which are related to the international transportation of goods where the business is liable for VAT.
Another condition of the refund claim will be that your own country has similar refunds to UK traders when it comes to their turnover taxes. Your application will generally only be refused on these grounds when your own country has a scheme for returning these taxes, but does not allow UK traders to use it. VAT will often arise when the employees of an overseas company have to travel to the UK.
The Time Limits
The claim will need to be received by the UK tax authority no later than 6 months after the last day of the prescribed year when the VAT was incurred. A prescribed year is a 12 month period that runs from 1 July to 30 June. This means that claims for the year ending 30 June 2018 will need to be in no later than 31 December 2018. It is important to note that the time limit is very strictly applied. There are always changes going on across the world as this post from VATGlobal exemplifies.
The Minimum And Maximum Amounts
There are no upper limits when it comes to a refund claim. However, there are minimum amounts for claims that you need to be aware of. The amount of VAT reclaimed cannot be less than £16 if the application is for the entire prescribed year or for less than 3 months if that was all that remained of the prescribed year. If a claim is being made for less than the full year, the minimum VAT will be £130.
The Claims Process
In order of a claim to be approved, there are certain formalities that need to be adhered to. If a business is making their first claim in the UK, they will need to submit a document from their own country showing that they have been registered for business there. This will generally be a certificate which needs to show all of the information regarding the business that the UK authorities will need to process the claim.
The certificate that you send will need to be the original and not a photocopy. It will also need to contain the following information:
- The name, address and official stamp of the authorizing body
- The name and address of the claimant
- The nature of the business
- The business registration number
These certificates will only be valid for 12 months from the date of issue. They will also only cover the claims which are made during that year.
If a US company makes their first claim, they will have to include the original certificate they get from the US official authority showing proof of business registration. The original Form 6166 can be obtained from the IRS Certification Unit and will satisfy the needs of the business. The certificate will need to be renewed every 12 months.
Each claim will also need to have adequate proof of the VAT which was incurred. Original supplier invoices, receipts, and vouchers showing all of the following details are the only documents accepted:
- An invoice number
- The name, address and VAT registration number of the supplier
- The name and address of the claimant
- The details of the service or goods acquired
- The date of supply
- The cost of the service or goods excluding VAT
- The VAT rate
- The amount of VAT charged
For individual expenses of £250 or less including VAT, these requirements will be relaxed. Subsistence and hotel costs only need the name of the employee who was traveling to be on the supplier’s invoice. However, in these cases, proof of employment will need to be submitted with the claim.
It is possible for claims to be submitted by the claimant or by an authorized agent on behalf of the claimant. When there is an agent, a letter of authority or a power of attorney will be required and has to be submitted with the first claim.
The Timing Of Refunds
VAT refunds will generally be made within 6 months of receipt of a satisfactory claim. It is possible for repayments to be refused and a reason will be provided. An appeal of the decision will need to be made within 30 days.
There are certain VAT costs that are not refundable. This will include VAT from non-business purposes, VAT from business entertainment expenses and the VAT from any supply used in the UK.