If you are a UK business currently incurring VAT in other EU Member States or you are an EU business incurring VAT in the UK then you need to be aware that the mechanism by which this VAT can be reclaimed will change with the implementation of Brexit.
1. UK Businesses Incurring VAT in other EU Member States
HM Revenue & Customs (HMRC) has confirmed that access to the European Union VAT refund system for expenses occurred before 1 January 2021 will cease on 31 March 2021.
Up until 11pm on 31 March 2021, UK businesses will still be able to use the European Union VAT refund system <click here>.
After this date, UK businesses wishing to claim a VAT refund will have to do so through the relevant member state’s tax authority. This is likely to then be the process for refunds of VAT incurred in those Member States after 1 January 2021.
Each EU Member State has different rules as to what VAT can be recovered (e.g. some member states will allow the recovery of VAT on hotel costs whilst other will not). The following link provides some guidance in respect of the specific VAT rules in a Member State <click here>.
This may mean that local VAT advice will be required. It is also likely to mean that claims for small amounts of VAT might not be economically viable.
2. EU Businesses Incurring VAT in the UK
For EU businesses not registered for VAT in the UK, the UK will continue to accept refund claims through the EU VAT refund system for VAT charged in the UK before 1 January 2021 until 31 March 2021.
Any claims after this date, or claims for expenses incurred after the Brexit transition period ends, should be filed using the manual process for businesses outside the UK <click here>.
For help and advice on related matters, please get in touch with our expert VAT support team today.