Changes to the procedure for obtaining refunds of VAT paid in other EU Member States
In 2010 a new electronic VAT refund procedure will be introduced across the EU. It will replace the old paper system. Businesses established in the UK will submit their claims through the UK Government's gateway. This should significantly simplify the procedure of claiming overseas VAT. Other measures have been taken to make it even simpler, for example, introduction of expenditure codes for the nine most commonly claimed expenses – full details are in the guidance issued by HMRC.
The VAT Notice 723A: Refunds of VAT in the European Community for EC and non-EC businesses available from the HMRC website provides further explanations and answers frequently asked questions. It also contains the draft UK secondary legislation.
UK businesses wishing to claim overseas VAT will have to register on the UK portal via the Government Gateway. The portal will be open for registration late in 2009. The basic details of VAT claims submitted through this portal will be verified by the UK, not by the Member State of Refund (MSR), so certificates of UK VAT status to support claims will no longer be necessary. The errors in claim completion will be identified and flagged, so the applicant could correct them and reduce the possibility of the claim being rejected.
Further enhancements of the claim submission system are planned for the future.
The guidance also touches the language-related issues. Luckily for the UK residents, many Member States have indicated that they are going to allow English to be used for free text fields.
The other important things to remember are as follows:
- Claims containing errors will still be forwarded to the MSR, but the MSR can decide to reject the claim.
- If a claim is refused in whole or in part, the decision by the MSR can be appealed.
- The time limit for submission has been extended from six months to nine months.
- The MSR will have four months to verify the claim, but this can be extended where they request further information from the claimant.
- There will be a maximum of five claims that can be submitted to each MSR per year.
HMRC have published guidance in VAT Notice 723A: Refunds of VAT in the European Community for EC and non-EC businesses containing details of how the new system works.
This article is the fifth in the series outlining the changes in the VAT rules for 2010.
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