HMRC: UK VAT Refund for Non-UK Businesses Via Notice 723A

• HMRC VAT Notice 723A details how non-UK businesses can reclaim UK VAT incurred on supplies made from January 1, 2021.
• The scheme applies to businesses registered outside the UK and includes VAT incurred in the Isle of Man, which is treated as part of the UK for VAT purposes.
• Eligibility hinges on a reciprocity rule, requiring the claimant's home country to offer similar tax concessions to UK businesses.
• Import VAT can be reclaimed by the goods' owner if no other relief is available, but not if it triggers UK VAT registration liability.
• Claims must be submitted by the business that incurred the VAT, cover a period between 3 and 12 months (July 1 to June 30), and adhere to specific group VAT rules.

To qualify for a UK VAT refund under this scheme, a business must be registered for business purposes in a country situated outside the UK.

Non-UK businesses seeking to recover Value Added Tax (VAT) incurred within the United Kingdom can navigate the process through the guidelines outlined in HMRC VAT Notice 723A. This crucial directive details the mechanism for a UK VAT refund for non-UK businesses 723A, specifically applying to supplies made from January 1, 2021, onwards. It serves as a guide for entities established outside the UK to reclaim VAT paid on goods and services acquired domestically.

For VAT purposes, the Isle of Man is considered an integral part of the UK, with its own Manx legislation governing VAT, which closely mirrors UK law. Consequently, the provisions of this scheme extend to VAT incurred within the Isle of Man, meaning any reference to the UK in this context implicitly includes the Isle of Man. Foreign business UK VAT obligations can arise, for instance, when participating in a trade fair, where goods or services are used within the UK, even if the business is registered abroad. However, VAT paid on goods intended for export is generally not subject to this process.

It is important to note that businesses not registered for VAT in the UK cannot treat such VAT as input tax. Instead, the scheme described in Notice 723A provides the pathway for a UK VAT reclaim non-resident entity to recover these charges. While the notice indicates that VAT can be reclaimed on certain items, it also specifies categories of expenditure for which the scheme cannot be utilized, necessitating careful review of eligible expenses.

To qualify for a UK VAT refund under this scheme, a business must be registered for business purposes in a country situated outside the UK. A fundamental aspect of the VAT refund conditions UK is the principle of reciprocity. This means that the claimant's home country must offer similar concessions to UK businesses regarding its own turnover taxes.

An application for a refund will only be denied on these grounds if the applicant's country operates a scheme for refunding such taxes but explicitly refuses access to UK businesses. This ensures a fair and reciprocal arrangement between nations. Furthermore, while UK import VAT refund is possible if no other VAT relief is available at the point of import, a business cannot utilize this scheme if the act of importing goods would subsequently render it liable for VAT registration within the UK. Only the legal owner of the goods, defined as having the 'right to dispose of goods as owner,' may claim import VAT.

The responsibility for submitting a claim rests solely with the business that originally incurred the VAT. In the case of VAT groups, only the representative member can submit a claim, and only for VAT it has personally incurred. The application must meticulously list the full business names of all VAT group members throughout the relevant application period.

The prescribed refund period spans 12 months, commencing on July 1 and concluding on June 30 of the subsequent calendar year. An individual application's covered period must not exceed this prescribed year, nor can it be shorter than three calendar months, unless the claim pertains to the remaining portion of the prescribed year. When goods and services are used for both taxable and exempt supplies, VAT recovery is typically limited to the extent they are used for taxable supplies, a principle further detailed in VAT Notice 706 on Partial Exemption.

For EU businesses whose claims relate to VAT on expenditure incurred on goods within Northern Ireland, specific guidance on claiming VAT refunds in Northern Ireland or the EU is available. Additionally, non-EU visitors purchasing certain goods in Northern Ireland may be eligible for a refund under the VAT Retail Export Scheme, which has its own dedicated guidance.

Lawyers and compliance officers advising non-UK businesses must understand the specific conditions, eligible expenses, and procedural requirements of VAT Notice 723A to facilitate UK VAT refunds and ensure compliance, particularly regarding the reciprocity rule and claim periods.

Source: Original reporting via GOV.UK guidance