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Friday
Mar192010

Companies With UK VAT Registration May Not Be Able To Claim Foreign VAT

I was talking to one of my friends this morning and it turns out that he has been put in the rather unfortunate position of not being able to claim back the VAT on some of his company’s overseas purchases.

He’s said that he’s now unlikely to be ordering parts again from a number of countries, as he hasn’t been able to claim back the VAT (equivalent) on some of the transactions. It’s forcing his hand to look for alternative suppliers elsewhere.

It seems that my friend is not alone in his overseas taxation troubles. Many UK businesses are experiencing difficulties in recovering VAT spent on foreign purchases. Unfortunately, there are no agreed global rules or taxation principles that allow for the recovery of VAT in a standard manner. Some countries simply don’t allow it. Others have very convoluted and lengthy processes involved in getting most but not all of the tax refunded.

A number of recent surveys have only highlighted the issue further. Whilst it’s difficult to obtain an accurate figure on just how many transactions and what their combined value is, it’s safe to say that a large number of businesses are affected by this loophole in international VAT taxation processes. Presently there are a small number of organisations lobbying to have a more joined and fair approach but if (or when) this will happen is still anyone’s guess. Like my friend, everyone is going to have to grin and bear it for now.

Here at St Matthew, we have a large number of clients with overseas transactions on their books. Our experiences in this field put us in the best place to advise you on which countries offer an easier VAT recovery route. Alternatively, if you’d like to know more about UK VAT registration and which scheme would work best for your limited company, just speak to one of our advisors who will be happy to help.

 



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