New process and deadline for UK VAT refunds to EU Businesses
The VAT refund process for EU businesses incurring UK VAT changed from 1 January 2021.
Prior to Brexit, and subject to the relevant conditions being met, EU businesses which were not registered or established for VAT in the UK, could submit an EU VAT refund claim via a portal in their own Member State to recover UK VAT that was incurred for business purposes. The claim period related to the calendar year in which the expense was incurred, with a submission deadline of 30 September the following year.
Following Brexit, online claims could continue to be submitted by EU businesses until 31 March 2021 for any UK VAT incurred up to 31 December 2020.
What has changed?
The deadline and method for submitting claims then changed. UK VAT can no longer be claimed by EU businesses via the electronic EU refund process. They must now complete and submit form VAT65A to HMRC.
The period the claim relates to is also different from the previous refund method. Rather than a claim period of a calendar year, claims should now be submitted by EU Businesses on the basis of a ‘prescribed year’ which runs from 1 July to 30 June. As a result, the deadline for the submission of a claim for any VAT incurred in the UK by an EU business between 1 January 2021 and 30 June 2021 is 31 December 2021.
Non-EU businesses which are not registered or established in the UK and have incurred VAT in the UK for business purposes will also have a deadline of 31 December 2021, but for the whole 12-month period of 1 July 2020 – 30 June 2021.
VAT incurred on goods in Northern Ireland can still be claimed via the EU VAT refund scheme as a result of the Northern Ireland Protocol.