1. Understand What VAT Is
VAT (Value Added Tax) is a consumption tax charged on most goods and services in the UK. The standard rate is currently 20%, with some items charged at reduced or zero rates. If you’re a business or a non-UK resident tourist, there are legal ways to reclaim this tax.
2. Who Can Claim VAT Back in the UK?
You can claim VAT back if:
- You’re a VAT-registered business making taxable supplies
- You’re a non-EU visitor exporting goods bought in the UK (though retail VAT refund schemes for tourists are currently limited)
Businesses claim VAT through HMRC, while tourists must follow specific retail schemes, if available.
3. Register for VAT (Businesses Only)
Before you can claim VAT back as a business, you must be registered for VAT with HMRC. Registration is required if your taxable turnover exceeds the threshold (currently £90,000 as of 2025).
4. Keep All VAT Invoices and Receipts
To claim VAT back, you must have proper VAT invoices showing:
- The VAT number of the supplier
- The amount of VAT charged
- The goods or services supplied
Without valid documentation, HMRC won’t approve your claim.
5. Submit a VAT Return (Businesses)
VAT-registered businesses must file VAT returns, typically every quarter. These returns detail:
- VAT you’ve charged customers (output tax)
- VAT you’ve paid on purchases (input tax)
- The difference between the two, which is either paid to or reclaimed from HMRC
Use accounting software compatible with Making Tax Digital to ensure compliance.
6. Reclaim VAT on Business Expenses
You can reclaim VAT on goods and services used for business purposes. Common items include:
- Office supplies
- Equipment
- Travel and accommodation
- Marketing and advertising
However, VAT on personal expenses or certain restricted items (like business entertaining) cannot be reclaimed.
7. Claim VAT on Imports
If you import goods into the UK, you may be able to reclaim the import VAT paid through your VAT return. You’ll need a C79 certificate from HMRC to support your claim.
8. Use the VAT Retail Export Scheme (Tourists)
As of 2021, the VAT Retail Export Scheme was abolished for visitors to Great Britain. However, Northern Ireland still allows VAT refunds for non-EU visitors exporting goods. Check eligibility with local authorities or airport customs.
9. Ensure Claims Are Made on Time
VAT reclaims must be made within four years of the tax date on the invoice. Late claims are not accepted, so regular bookkeeping and timely submissions are essential.
10. Understand VAT Refunds for Overseas Businesses
Overseas businesses (not established in the UK) may be able to reclaim VAT under the 13th Directive (for non-EU businesses). Applications must be submitted to HMRC with supporting documents, typically by 31 December of the following year.
11. Anticipate HMRC Audits or Enquiries
HMRC may request supporting evidence or conduct an audit of your claims. Keep detailed and organised records to ensure you’re prepared.
12. Work with a VAT Accountant
To avoid errors and optimise your VAT position, it’s wise to work with a professional accountant experienced in VAT regulations. This can save time and reduce the risk of compliance issues.
Frequently Asked Questions
Q1: Can I claim VAT back if I’m self-employed?
Yes, if you’re VAT-registered and the expenses relate directly to your business.
Q2: How long does it take to receive a VAT refund?
HMRC typically processes refunds within 10 working days after receiving your VAT return, though it may take longer if they need to review your submission.
Q3: Can tourists still claim VAT back in the UK?
No, the VAT Retail Export Scheme has been discontinued for Great Britain. Northern Ireland has limited options under EU rules for non-EU visitors.
Q4: Can I claim VAT on meals and client entertainment?
Generally, VAT on entertainment expenses is not reclaimable, with some exceptions for staff events or internal meetings.
Q5: What if I made a mistake on my VAT return?
You can adjust errors on your next return if the mistake is under the set threshold. Larger errors must be reported separately to HMRC.
Q6: What documents do I need to support a VAT claim?
You need valid VAT invoices, proof of payment, and clear records showing the business use of the expense.
Conclusion
Knowing how to claim VAT back in the UK is crucial for businesses to stay financially efficient and compliant. Whether you’re a local entrepreneur or a visitor navigating VAT rules, keeping accurate records and following the proper process ensures a smooth reclaim experience. Don’t miss out on what’s legally yours—claiming VAT back can significantly improve your bottom line.
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