Background
An Irish-based pharmaceutical company regularly sends sales and technical employees to the UK for business purposes, including trade shows, client meetings, and supplier facility visits. The company has incurred significant expenses subject to UK VAT over the last siz years, including:
- Business meals
- Hotel accommodations
- Transportation (taxis, trains and car rentals)
- Conference and exhibition costs
This company does not have a permanent establishment or VAT registration in the UK, and cannot reclaim UK VAT through a local VAT return.
The Challenge
Our Client wanted to recover the VAT paid on these business expenses but was unsure about the process, eligibility, and timeline for reclaiming VAT under the UK’s VAT refund scheme for non-UK businesses.
Our Solution
The company appointed GTR to assist in optimising and managing their cross border VAT reclaim, who carried out the following:
1. Eligibility Check
- Verified that the business expenses were eligible under UK VAT refund criteria.
- Confirmed that our client was not registered for VAT in the UK.
- Verified that our client was VAT-registered in Ireland
- Verified that our client was not supplying goods or services that would require UK VAT registration.
2. Submission through the EU VAT Refund Mechanism (Pre-Brexit) or UK 13th Directive (Post-Brexit)
- Since Brexit, Irish companies must apply for VAT refunds through the UK’s 13th Directive VAT Refund Scheme instead of the EU VAT refund portal.
- The company had to submit a claim directly to HMRC, including all required supporting documents (VAT invoices, proof of payment, and a letter of authority).
3. Processing Time & Challenges
- The VAT refund claim was submitted within the June 30th deadline for expenses incurred in the previous calendar year.
- HMRC requested additional clarification regarding business purposes for some expenses (such as meals and entertainment).
- GTR addressed and responded to HMRC’s queries, ensuring compliance with VAT refund rules.
4. Outcome
- After a processing period, which in this case was approximately four months, our client successfully reclaimed £23,000 in VAT on UK business expenses.
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