Refunds of UK VAT for non-UK businesses (VAT Notice 723A)

Question

Accepted Answer

This notice applies to supplies made on or after 1 January 2021.

Find out about supplies made in Northern Ireland.

1. Overview

1.1 What this notice is about

This notice explains how businesses established outside of the UK can reclaim VAT incurred in the UK. It also explains that UK and Isle of Man businesses can claim a refund of VAT incurred abroad.

1.2 Laws that cover this notice

The UK laws that cover this notice are:

Value Added Tax Act 1994, Section 39
Value Added Tax Regulations 1995 (SI 1995/2518) Parts 20A and XXI
Value Added Tax (Miscellaneous and Transitional Provisions, Amendment and Revocation) (EU Exit) Regulations 2020 (SI 2020/1495) Part 3

1.3 Isle of Man

For VAT purposes, the Isle of Man is treated as part of the UK. VAT is chargeable in the Isle of Man under Manx legislation, which is similar to UK legislation. The scheme described in this notice also applies to refunds of VAT incurred in the Isle of Man. Any references to the UK in this notice include the Isle of Man.

2. Refunds of UK VAT for businesses established outside the UK

2.1 What this scheme is for

You may have to pay UK VAT if you’re registered for business purposes abroad and you buy goods or services in the UK. This does not apply if you buy goods for export, but it may apply if what you buy is used in the UK. For example, if you take part in a trade fair.

You cannot treat this VAT as input tax if you’re not registered for VAT in the UK. You may be able to use this scheme to reclaim VAT charged on:

imports into the UK
purchases of goods and services used in the UK

2.2 Who can apply

If you’re registered for business purposes in a country outside the UK, you may use the scheme to reclaim VAT paid in the UK. You can do this if you meet the 2 following conditions:

you are not registered, liable or eligible to be registered for VAT in the UK — find more information in Who should register for VAT (VAT Notice 700/1).
you have no place of business or other residence in the UK and do not make any supplies in the UK (other than transport services related to the international carriage of goods, or supplies where VAT is payable by the person in the UK to whom the supply is made)

It is a condition of the scheme that your own country allows similar concessions to UK businesses in respect of its own turnover taxes. Your application will only be refused on these grounds if your own country has a scheme for refunding these taxes but refuses to allow UK businesses to use it.

If you are an EU business and your claim relates to VAT on expenditure incurred on goods in Northern Ireland, read claim VAT refunds in Northern Ireland or the EU, if you’re established in Northern Ireland or in the EU.

2.3 Goods and services you can and cannot reclaim VAT on

During the refund period you can claim UK VAT on:

goods and services purchased in the UK
goods imported into the UK

You cannot use the scheme to reclaim VAT on:

goods and services used for non-business activities — if a supply covers both business and non-business use, VAT can be reclaimed on the business element of the supply
any supply used or to be used to make a supply in the UK
the supply or importation of most ordinary business cars — only 50% of the VAT incurred on the hire of lease of a car for mixed business and private purposes is allowed
certain second-hand goods, like cars and antiques, for which no VAT invoice will be issued
business entertainment or hospitality expenses — VAT on entertainment for overseas customers may be reclaimed but only if it is of a very basic nature
export of goods (whether direct or indirect), but these may be zero-rated, provided the supplier has the necessary evidence — find more information in VAT on goods exported from the UK (VAT Notice 703)
goods and services you have bought for resale which are for the direct benefit of travellers — fore example, hotel accommodation
any supply used, or to be used, to make an exempt supply outside the UK (for this purpose an exempt supply is a supply described as exempt in Schedule 9 to the Value Added Tax Act 1994, whether or not the place of the supply is in the UK)
goods that can be claimed under the Northern Ireland Protocol

There is also a VAT Retail Export Scheme which allows non-EU visitors a refund of VAT on certain goods that they buy in Northern Ireland. For more details of the scheme, read guidance on the Retail Export Scheme (Northern Ireland).

2.4 Partial exemption

In most cases, where goods and services are used to make both taxable and exempt supplies, you can only recover VAT to the extent that they are used to make taxable supplies. For more information, read Partial exemption (VAT Notice 706).

2.5 VAT paid on imports

If you’re importing goods into the UK, you can reclaim any VAT due if there is no VAT relief available at import. But you’ll not be able to use the scheme if, as a result of importing the goods, you become liable to register for VAT in the UK.

Import VAT may only be claimed by the owner of the goods. For VAT purposes, ownership means you have ‘the right to dispose of goods as owner’.

Find out about paying VAT on imports from outside the UK to Great Britain and from outside the EU to Northern Ireland.

2.6 VAT groups

When VAT is incurred by businesses who receive VAT group treatment, the representative member of the VAT group must apply on behalf of all the members. As the supporting invoice produced may not be addressed to the representative member, the certificate of status must also contain the names of the group members who incurred the VAT (read section 2.11).

2.7 Time limits for making an application

You must make any claim no later than 6 months after the end of the ‘prescribed year’ in which you incurred the VAT.

The prescribed year is the 12 months from 1 July to 30 June of the following calendar year, so you must make your application no later than 31 December.

To ensure fair treatment for all claimants, applications are dealt with on a ‘first come, first served’ basis and the time limit is applied strictly.

2.8 Claim limits

There is no maximum amount you can claim, but the UK has set minimum amounts that can be reclaimed.

Your application should cover any VAT you’re reclaiming over a period of at least 3 months but not more than the full prescribed year.

When your application is for a period of less than 12 months, the total amount of VAT claimed must not be less than £130.

The application can cover less than 3 months if this is all that remains of the prescribed year. In that case, or when the application is for the full 12 months of the prescribed year, the amount of VAT claimed must not be less than £16.

You can also include items missed on earlier applications as long as they related to VAT charged in the prescribed year.

2.9 How businesses established outside the UK can claim refunds of UK VAT

2.9.1 Electronic submission of claims

You can now submit claims electronically using HMRC’s Secure Data Exchange Service (SDES). This is optional and there are no immediate plans to make it mandatory.

The SDES is currently being tested. It is available to businesses and agents to make claims, but during the testing period you will need to email the Overseas Repayment Unit (ORU) to request access (read paragraph 2.9.2).

While the service is being tested, there may be times when we need to stop it without notice. If we need to stop the service, we’ll tell you by updating our online guidance to let you know how to submit your claim. If we stop the service, this will not affect the claims that have already been submitted.

If you want to submit an electronic claim before the deadline on 31 December, you must apply to register on or before 30 November to allow us to put you onto the system.

In your electronic claim, you must include your:

VAT65A
certificate of status
invoices
other supporting documents and information

You must make your claims by post if:

you do not want to use SDES to submit your claims
you have not registered to use SDES by 30 November

For more information, read paragraph 2.9.4.

2.9.2 Requesting access to the Secure Data Exchange Service

If you want to submit your claims using SDES, you need to email the ORU. You should include:

‘SDES’ in the subject field
confirmation you would like to use SDES
whether you have a business tax account already set up

We will contact you within 15 calendar days to start the registration process and provide registration guidance.

If you have any difficulty during the registration process, call the ORU. Do not contact the VAT helpline — they will only direct you to this notice.

2.9.3 After you’ve submitted a claim

You will receive a dated receipt. If you do not receive a receipt, email the ORU and put ‘SDES Claim’ in the subject.

If you do not receive any contact within 6 months of submitting your claim, email the ORU, attaching the date-stamped SDES receipt.

You must keep all original hard copies of documents associated with your claim. We have the right to request these. Failure to keep such documents may result in claims being rejected in full or in part. Read ‘proof that you’ve paid VAT’ (section 2.12) to find out which documents you need to make a claim.

2.9.4 Postal claims

You must post your claim to HMRC on or before 31 December if:

you do not want to use the SDES system
you do not register for SDES before 30 November

You must send us your:

VAT65A
certificate of status
invoices
other supporting documents and information

This information should be sent to:

HM Revenue and Customs — Compliance Centres
VAT Overseas Repayment Unit S1250
Benton Park View
Newcastle upon Tyne
NE98 1YX
United Kingdom

We may ask you to provide proof of postage to confirm that you posted the claim on or before 31 December.

2.9.5 Email security

We can only correspond with you by email if you have given us your permission. You should include the following email consent when you make a claim.

‘I understand and accept the risks associated with corresponding via email, and I am content for HMRC to send this sensitive information to me via email.’

If you are the authorised agent or representative, you will need to confirm in writing that your client understands and accepts the risks.

This email consent is valid for 12 months and will need to be updated.

For more information, read HMRC’s privacy notice.

Read factsheet CC/FS72 DSC1 Corresponding with HMRC by email to find out more about contacting HMRC by email.

2.10 Application form

Apply using the VAT65A form.

The VAT65A should be completed electronically. The schedule at question 9 must be typed and not handwritten.

The next sentence has force of law under the Value Added Tax Regulations 1995.

Applications by non-UK businesses for refunds of VAT incurred in the UK (under the terms of Value Added Tax Regulations 1995 (SI 1995/2518) regulation 191(1) (a)) may be made on form VAT65A and must contain the information requested on that form.

The legislation also permits use of a similar form if:

it is produced by an official authority
it contains the same information and declaration as the VAT65A form

2.11 Certificate of status

2.11.1 Certificate proving your business activity

When you make your first application, you must also include a certificate of status from the official authority in your country. This will show that you’re registered for business purposes in that country.

When you apply for the certificate of status, make sure you ask for it to show all the information that the UK authorities will need to process your application. For example, if the invoices are made out in your business’s trading name, the certificate must show this as well as the name of the person registered.

The certificate of status must contain:

the name, address and official stamp of the official authority (or other recognised identification mark)
the name and address of the business (if this is a PO Box address, more information can be found in paragraph 2.11.3)
the nature of your business
your business registration number

If you are submitting a claim as part of a VAT group, the certificate of status must also include the names of the group members.

You must apply for the certificate of status and send it to HMRC before the relevant deadline. We will accept late certificates if there is an exceptional event which prevents the official authority from issuing a certificate in good time. Examples of exceptional events may be:

a global pandemic
a national epidemic
a national emergency
a government shutdown

The certificate of status must be supplied within a reasonable time after it was issued. You may be required to provide evidence of the delay, and that you requested the certificate within a reasonable time. This evidence may include information from the official authority’s website. You must still submit all other documents of the claim by the relevant deadline.

If you are submitting your claim electronically, you must keep the original certificate of status. If you are sending your claim by post, you must send the original certificate. A photocopy is not acceptable.

You may also use the VAT66A form.

The next sentence has force of law under the Value Added Tax Regulations 1995.

The certificate of status for non-UK businesses required under the terms of Value Added Tax Regulations 1995 (SI 1995/2518) regulation 191(1)(b)(i) may be made on form VAT66A and must contain the information requested on that form.

The legislation also allows the use of a similar form if:

it is produced by an official authority
it contains the same information set out in the VAT66A form

2.11.2 Submitting an electronic certificate

We will accept electronic certificates of status if they’re issued by the official authority in your country of establishment and the official authority, or other recognised authority, has an online validation system that HMRC can access to verify that you’re in business.

We may request alternative evidence from you if information is missing from the electronic certificate of status.

2.11.3 Business address

This is the address where the business is established. For example the place of its central administration and where the general policy and day to day running of business activities takes place. A postal or mailing address is not a business address.

We are aware that, in some regions, the address of a business establishment can include a PO Box because not all the roads and buildings are numbered.

Where we have received a certificate of status and it is unclear if the address is that of a business establishment, or a mailing address, we will ask for documentary evidence to make sure that this is the place where your business is established.

2.11.4 Validity of the certificate

Each certificate is valid for 12 months from its date of issue. It will cover any applications you make during that year. Once the certificate has expired, you will need to send it to us with your next application.

2.12 Proof that you’ve paid VAT

You must have correctly completed invoices, vouchers or receipts from your suppliers showing:

an identifying number
your supplier’s name, address and VAT registration number
your name and address
details of goods or services supplied
the date of supply
the cost of the goods or services (excluding VAT)
the rate of VAT
the amount of VAT charged

If the value of a supply is £250 or less (including VAT), the invoice only needs to show:

your supplier’s name, address and VAT registration number
the date of supply
details of goods or services supplied
the cost of the goods or services (including VAT)
the rate of VAT

If you have imported goods, you must have the VAT copy of the import entry or other customs document showing the amount of VAT you have paid.

If you send your claim electronically, you must keep originals of all invoices and import documents with your application. If you submit your claim by post, you must send original documents — copies are not acceptable.

2.13 Appointing an agent to make claim on your behalf

You can prepare and send your own application or have this done by an agent. If you use an agent, they must be authorised before acting for you, or receiving any money on your behalf. You can authorise an agent using:

a Power of Attorney
a letter of authority

Example — format of a letter of authority acceptable to HMRC

‘I (name and address of claimant) hereby appoint (name and address of agent) to act on my behalf in connection with any application I make to the Commissioners of HMRC under the Value Added Tax Regulations 1995 as from time to time amended or replaced. Any repayment of VAT to which I am entitled pursuant to any such application made on my behalf by my above named agent shall be paid to (name and address of payee).

Date signed (by the claimant)’

2.14 Electronic signatures

You may use an electronic signature on the VAT65A, Power of Attorney or letter of authority. Electronic signatures may include:

scanned or photocopied documents of handwritten signatures
names typed into electronic documents or messages
signatures signed on the screen of a digital device
verified digital signatures

Signatures must be provided by the claimant themselves with full and informed consent. We may seek assurance or further information to verify this.

2.15 When your refund will be paid

The refund will be made within 6 months of receiving a satisfactory application. If your application is in order, the invoices showing that you have paid the VAT will be returned to you as soon as your application is authorised for payment. If you have a query about an application you have made, contact the ORU.

If your application is found to be incorrect after the refund has been paid, any overpayment will normally be deducted from your next refund.

HMRC may charge penalties for incorrect applications. If you have made an error, you should submit a correction as soon as possible.

We take a very serious view of false applications. Refunds obtained by means of a false application can be recovered, and penalties may be imposed.

2.16 Method of payment

Payment can be made directly to your own bank through one of the following:

Society for Worldwide Inter-Bank Financial Telecommunications (SWIFT)
a UK bank

As payment by SWIFT is faster, less expensive and more secure, you’re encouraged to use this method of payment. If you opt for payment by SWIFT, you must provide the following information, together with a copy of a bank credit slip:

bank account number
currency of account
bank identification code
bank account name
bank name
bank address

Payments to bank accounts will be made in pound sterling.

2.17 Application rejected

If your application is rejected, we’ll tell you the reasons why.

If you do not agree with the decision, you can either:

ask for the decision to be reviewed by an HMRC officer not previously involved in the matter
appeal to an independent tribunal

If you opt for a review, you can still appeal to the tribunal after the review has finished.

If you want a review, you should:

write to the address given in the decision letter within 30 days of the date of the letter
give your reasons why you do not agree with the decision

If you want to appeal to the tribunal you should send them your appeal within 30 days of the date of the decision letter.

Find out more about appeals and reviews.

3. How UK and Isle of Man businesses can claim overseas VAT

UK and Isle of Man businesses can claim refunds of VAT from countries abroad. This process varies across the world so you will need to follow the procedure set out by the country from which you’re making the claim. UK businesses may need to provide a VAT66 certificate of status.

Get more information about claiming VAT refunds from EU countries on the EU Commission’s website

Check how to claim VAT refunds in Northern Ireland or the EU, if you’re established in Northern Ireland or in the EU.

Your rights and obligations

Read the HMRC Charter to find out what you can expect from us and what we expect from you.

Help us improve this notice

If you have any feedback about this notice, email: customerexperience.indirecttaxes@hmrc.gov.uk.

You will need to include the full title of this notice. Do not include any personal or financial information like your VAT number.

If you need general help with this notice or have another VAT question, you should phone our VAT helpline or make a VAT enquiry online.

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If you’re still unhappy, find out how to complain to HMRC.

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Refunds of UK VAT for non-UK businesses (VAT Notice 723A)

1. Overview

1.1 What this notice is about

1.2 Laws that cover this notice

1.3 Isle of Man

2. Refunds of UK VAT for businesses established outside the UK

2.1 What this scheme is for

2.2 Who can apply

2.3 Goods and services you can and cannot reclaim VAT on

2.4 Partial exemption

2.5 VAT paid on imports

2.6 VAT groups

2.7 Time limits for making an application

2.8 Claim limits

2.9 How businesses established outside the UK can claim refunds of UK VAT

2.9.1 Electronic submission of claims

2.9.2 Requesting access to the Secure Data Exchange Service

2.9.3 After you’ve submitted a claim

2.9.4 Postal claims

2.9.5 Email security

2.10 Application form

2.11 Certificate of status

2.11.1 Certificate proving your business activity

2.11.2 Submitting an electronic certificate

2.11.3 Business address

2.11.4 Validity of the certificate

2.12 Proof that you’ve paid VAT

2.13 Appointing an agent to make claim on your behalf

Example — format of a letter of authority acceptable to HMRC

2.14 Electronic signatures

2.15 When your refund will be paid

2.16 Method of payment

2.17 Application rejected

3. How UK and Isle of Man businesses can claim overseas VAT

Your rights and obligations

Help us improve this notice

Putting things right

How HMRC uses your information

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