Do You Need Original Paper VAT Receipts to Claim Back VAT?

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One of the benefits of registering for a Value Added Tax (VAT) number is claiming back the VAT incurred when purchasing goods and services. However, claiming back VAT is not straightforward, as it involves providing evidence to determine which goods and services are eligible for a VAT refund.

You may voluntarily register for the VAT number for your business anytime or it becomes mandatory when your business’s annual taxable income exceeds the VAT threshold of £90,000. Customers will pay any VAT added to the goods and services the business is offering.

This article will highlight what you need to claim back VAT and goods and services that can be claimed for VAT.

Why do businesses claim back VAT?

Avoid double taxation

When a business buys goods or services from manufacturers or suppliers, it will be charged VAT known as ‘Input tax’, which you can claim from HMRC to avoid double taxation. By claiming back VAT, your business’s finances will not be strained with unnecessary tax costs.

Lower operational costs

Most small businesses register voluntarily for a VAT number and by claiming back VAT, they can lower operational costs.  

Manage overall cashflow

When businesses reclaim VAT on the goods purchased from suppliers and manufacturers, it reduces the costs of your business purchases.

When is the right time to claim back VAT?

As long as your business is VAT-registered, you can claim back VAT on goods and services purchased for your business. This helps to manage your business cash flow and avoid double taxation.

However, VAT cannot be reclaimed on all goods and services. VAT cannot be reclaimed on goods and services purchased for personal use. The next section will explore which services and goods you can claim VAT.

What can you claim VAT back on?

Goods and services purchased for business purposes

You can only claim VAT on goods purchased like office supplies, furniture and equipment. VAT can be claimed on business expenses such as travel, hospitality, fuel and food expenses. 

Other business services

In terms of services, businesses can reclaim VAT if they onboarded or sought a professional service such as a consultant and were charged VAT. 

Travel expense

If your business involves traveling, you can claim back VAT on fuel, accommodation and food. However, you cannot claim VAT on clients’ entertainment.

Vehicle used for business purposes

You can reclaim VAT on a vehicle solely used for business purposes. However, if you use the car for personal use on weekends, you can claim back a portion of the VAT based on the percentage used for business.

These are the circumstances in which you can claim back VAT as long as it was strictly used for business purposes. Additionally, goods and services purchased within 4 years before obtaining VAT number VAT can be reclaimed. 

What will HMRC accept as evidence to claim back VAT?

To claim back VAT, you must have evidence of any business purchases to provide to HMRC. Such evidence can include;

VAT invoices

Purchases of any goods and services from a VAT-registered business must receive an invoice. This invoice contains the supplier’s and the customer’s details, description of the goods or service purchased, VAT number, tax point, and the date of the invoice

A detailed document

If VAT was charged on your staff members during a working visit, you will have to provide evidence such as an invitation letter, internal memo of the event, staff attendance and receipts of meals or accommodation.

Retail VAT receipts in the UK

VAT on fuel expenses used for business purposes can be reclaimed using retail receipts which are mostly offered in gas stations and can mostly suffice as evidence. Retail receipts can also be issued in high street stores. It contains goods purchased, cost and VAT charged.

Transactional proof

It is still possible to claim back VAT without an invoice or receipt. A transaction of purchase can act as proof, be it a bank statement or any other supporting documents, between VAT-registered businesses.

Paperwork

Any other paperwork apart from invoices and receipts can suffice as a piece of evidence, as long as it satisfies HMRC’s guidelines, such as mentioning;

•         The date of the purchase
•         Was the purchase solely for business purposes
•         If there were a commercial arrangement between you and the supplier

To claim back VAT on business expenses, a detailed document that can act as evidence, paperwork can include a policy statement, HR communication and documentation of the event agenda.

How to claim back VAT

Keep all VAT receipts and records

You can reclaim VAT from HMRC if you have records and receipts to prove it. Whether you are claiming VAT on business expenses or goods, ensure to keep all the receipts, invoices and paperwork to make a claim. The records must be accurate and up-to-date.

Submit your business VAT return

In the UK, businesses must submit a VAT return every quarter of the year ( every three months). You must detail how much VAT you have charged your customers and the VAT (input tax) you have paid on purchases.

What you owe HMRC or what you can reclaim will be the difference between the two (input and output VAT). 

Reclaim VAT

The VAT bill can be reduced or HMRC pays you a refund depending on the outcome of the differences. 

Can I claim VAT on goods purchased internationally?

You can claim back VAT on an international purchase depending on where the purchase was made. VAT-registered businesses in the UK purchasing their goods internationally will have to pay import VAT, which you can claim from HMRC as long as the purchase was for business purposes.

If you’re a UK business buying goods or services in the European Union (EU), you may be able to reclaim VAT through the VAT refund system or the 13th Directive process.

 

Summary

In conclusion, when claiming back VAT, you must provide evidence to HMRC, such as VAT receipts in the UK, VAT invoices, paperwork, transactional proof and detailed documentation. It is also important to know the deadlines for submitting VAT returns.

To register for a VAT number and submit VAT returns, contact Icon Offices and we will seamlessly help you and ensure that you comply with HMRC. With our VAT return services, we ensure businesses do not incur penalties due to late submission. You can also seamlessly reclaim your VAT.

For more information on VAT numbers and submitting VAT returns, contact us at [email protected].