People that purchase goods while taking a trip to the UK may have the option of reclaiming VAT paid. With that said, not everyone will be able to receive a refund. If you want your application to be a success, you’ll have to follow the rules and restrictions that are outlined.
This VAT refunds guide will break down what VAT is, the benefits of reclaiming it, the restrictions surrounding VAT refunds, and the procedures you need to follow if you’d like to reclaim the VAT.
What You Should Know About VAT
VAT is a type of consumption tax that’s applied to the purchase of goods and services. The name stands for “Value Added Tax.” Right now, the VAT rate is at 20%, which means 20% will be added onto the price of applicable purchases. This is the percentage of a purchase that can be reclaimed if you’re a qualified applicant. The 20% VAT rate has been in place since January 2011. When you purchase goods with VAT included, that 20% will have already been added to the cost. Visitors that make purchases while abroad can benefit greatly from applying for a VAT refund.
Who Is Eligible For a Refund?
Any visitor that lives outside of the European Union is eligible to claim a refund.
People that live outside of the EU are classified as overseas visitors.
Additionally, someone that is eligible for a refund will have to leave the UK with their goods and head to a destination outside of the EU. This must be done within three months from the purchase of the goods. This time limit shouldn’t pose a problem for the majority of tourists and visitors on business trips. However, people that are staying in the UK for a longer period of time may not be able to reclaim these funds.
It’s necessary to show the purchased goods at customs along with a receipt and a VAT refund document as you leave the EU.
People that live within the EU will be able to claim a refund if they meet certain criteria.
The individual must be planning on leaving the EU for a minimum of 12 months.
They must be leaving the UK for a destination outside of the EU along with the goods that were purchased. This must be done within three months of the purchase of the goods.
The individual has to stay outside of the EU for 12 months or more in order to receive their refund.
Again, the goods, receipt, and refund document must all be presented at customs when leaving the EU.
What Kinds Of Purchases Are Eligible For A Refund?
Visitors can reclaim funds on any purchases in the UK in which VAT was paid. That stated, there are a few exceptions to this rule. These are a few of the goods that are currently ineligible for VAT refunds:
New and used car purchases
Business exports with a value over £600
Internet purchases and other mail-order goods
Service charges, such as meals and lodging expenses.
You can see a full list of exceptions in the VAT refunds section of the HM Revenue and Customs website.
What To Do When You Purchase Goods
There is a voluntary program known as The VAT Retail Export Scheme. Visitors will want to make a point of doing this shopping at stores that are participating in this scheme. If you’re not paying attention, you could slip up and purchase your goods at stores that aren’t involved in this program. If you’d like to find out which shops are covered, you should talk to your hotel or your travel agent. They should be able to give you additional information.
Any shop that is a part of this program will provide you with one of the documents that you need to reclaim your funds through VAT. These documents include:
– VAT 407 forms
– A VAT Retail Export sales invoice
You will have to complete this form at the time of purchase. The form needs to be completed in the presence of the retailer. You will also have to prove to the retailer that you are eligible to participate in the scheme. For example, they may ask you to provide them with your passport.
You will want to talk to the retailer about how you will receive your refund. Certain retailers pay refunds on their own, but others work with refund companies. There are also companies that allow you to reclaim your refund at a refund booth when you are leaving the United Kingdom.
In certain circumstance, you may not receive the full VAT refund. For example, you may have to pay a handling charge to the retailer or the refund company that they are working with. This amount is typically taken out of the amount that you are owed. If you need to know more about VAT claims from overseas – read this post from VAT IT.
What To Do When You Are Leaving The Country
If you are a visitor that is traveling to a location outside of the EU, you must present both your goods and your refund form to the staff at UK customs at the airport you’re departing for. Because this process can take some time, it’s smart to arrive at the airport early. That way, you can make sure you have enough time to get everything taken care of.
Once customs officials have approved your form, you have three ways to obtain your refund. It’s likely that you will have already discussed these refund options with the retailer you bought the items from.
You may need to send the form to the retailer so that you can receive your refund.
You may need to send the form to a refund company that will arrange for you to receive your repayment.
You may be able to turn your form into a refund booth and receive your refund immediately. This can be very advantageous. When you go to a refund booth, you’ll receive your refund immediately. You won’t have to send out any forms; you’ll receive the money you need right then and there.
All of the information that is found in this VAT refunds for UK visitors guide is designed to provide visitors with additional information on VAT refunds and how they work. This information is specifically designed to aid people in reclaiming funds. All of this information is being given with good intentions, and, at the time of writing, is believed to be accurate. Because tax and VAT laws can change, you should take the time to look at the HM Customs & Revenue website so that you can see what the current procedures are. Rules and regulations aren’t static. If you want to make sure you stay in line with the requirements and receive your refund, you’ll want to make sure you’re completely up-to-date on what the latest laws are.