Managing VAT payments and refunds successfully can significantly decrease your operational costs and lower audit risks. It streamlines transactions and encourages business expansion. ACCA Global explains that, you can get a business VAT refund from over 80 percent of the VAT you incur on expenses. Many business do not claim or under claim their VAT because they lack the necessary information.
Understand VAT Rules and Regulations
In different countries and localities, VAT rules and regulations can vary significantly. It can be confusing to know which rules to apply where. To obtain a VAT refund easily, familiarize yourself with the rules and precedents involved, because they must be adhered to strictly.
Getting refunds from foreign countries is much more complex than locally. This is due to numerous directives, rules and regulations that apply on any eligible VAT expenses. Ensure that you or the staff involved in VAT refunds have the necessary knowledge to carry out these tasks.
It’s not essential to master the VAT rules and regulations if you can hire a company to do it on your behalf. Hire companies with expert and most updated knowledge. This way, your company can avoid costly audits by VAT authorities.
Know when to obtain a business VAT refund
The first step to obtain a VAT refund is to find out when you can and when you cannot. It is necessary for certain conditions to be fulfilled, for you to obtain the refund. First off, the expenses incurred should be related directly to your business. This includes any overheads and goods for resale.
The UK Government explains that you can obtain a refund on goods and services that your business has procured for its own use. You can obtain a VAT refund on its business proportion, if a purchase was made for private use. Professional services offered by your company that are not dependent on reverse charges can also be refunded.
Always confirm the accuracy of a VAT invoice to ensure it’s valid. Confirm its registration number to prove that a VAT registered company issued it. Getting a business VAT refund is possible only after completing your VAT registration. But, if any goods or services were purchased before registration, you can still claim.
Understand the Challenges of VAT Refunds
Getting a business VAT refund can be very complex if you lack the knowledge about the procedures and requirements. In addition to this, the VAT process can be quite complex with some challenges. Identifying the challenges you are likely to encounter can help you find a way to overcome them. It also reduce disruptions and lowers the costs involved.
Some of the challenges include, lack of technological support, inability to keep accurate documents and inability to comply with existing tax laws. Others include, using incorrect codes in tax accounting, missing audit trails for your company’s VAT calculations and lack of comprehensive and integrated VAT processing solution.
To obtain your VAT refund does not have to be a complicated and lengthy process. Knowing when to apply for a refund and when not to, is essential. A clear understanding of the regulations and knowledge of the challenges involved can make your work much easier.