1. Introduction
If you run a VAT-registered business in the UK, you can reclaim VAT paid on business-related expenses. Many entrepreneurs ask, “How do you get VAT back?” The process is straightforward if you keep proper records and follow HMRC’s rules.
2. What Is VAT Reclaim?
VAT reclaim is the process of recovering the Value Added Tax you’ve paid on eligible business expenses. This is done through your VAT Return, which balances VAT you’ve charged customers against VAT you’ve paid suppliers.
3. Who Can Claim VAT Back?
You can claim VAT back if:
- Your business is VAT registered.
- The expense is business-related.
- You have a valid VAT invoice or receipt.
4. What Expenses Can You Claim VAT On?
- Office supplies and equipment.
- Stock and raw materials.
- Business travel (fuel, transport, accommodation).
- Professional services (accountants, consultants).
- Utility bills and rent (if VAT applies).
Not Eligible:
- Personal expenses.
- Client entertainment.
- Some vehicles used for both business and personal purposes.
5. How Do You Get VAT Back? Step-by-Step
- Step 1: Register for VAT
You must be VAT-registered to reclaim VAT. - Step 2: Keep Records
Store valid VAT invoices and receipts for all purchases. - Step 3: Complete VAT Return
Submit your VAT Return online (usually quarterly). Report:- VAT charged on sales (output tax).
- VAT paid on purchases (input tax).
- Step 4: Calculate Balance
- If output tax > input tax → You pay HMRC.
- If input tax > output tax → HMRC refunds you.
- Step 5: Receive Refund
HMRC refunds VAT directly to your bank account, usually within 10 working days of submission.
6. Example of VAT Reclaim
- VAT charged to customers: £5,000
- VAT paid on purchases: £3,500
- Net VAT owed: £1,500 (you pay HMRC).
If reversed (e.g., purchases £6,000, sales £4,000), HMRC refunds you £2,000.
7. Common Mistakes to Avoid
- Forgetting to keep proper invoices.
- Claiming VAT on personal expenses.
- Missing VAT Return deadlines.
- Overclaiming without proper documentation.
8. Tips to Simplify VAT Reclaims
- Use accounting software to track VAT automatically.
- Keep digital copies of all invoices and receipts.
- File VAT Returns on time to avoid penalties.
- Seek advice from an accountant if unsure.
Frequently Asked Questions
1. How do you get VAT back if you’re self-employed?
You must register for VAT, then reclaim business-related VAT through VAT Returns.
2. Can you claim VAT on petrol?
Yes, but only for business-related fuel and with proper records (fuel receipts or mileage logs).
3. How long does it take HMRC to refund VAT?
Usually within 10 working days after submitting your VAT Return.
4. Can I claim VAT on old expenses?
Yes, you can reclaim VAT on purchases made up to 4 years before registration (if still in use for the business).
5. Do I need invoices to claim VAT back?
Yes, valid VAT invoices are required for all claims.
6. What happens if I claim VAT incorrectly?
HMRC can demand repayment, impose fines, or charge interest.
Conclusion
To answer “How do you get VAT back?”—you need to be VAT-registered, keep valid records, and submit accurate VAT Returns. By reclaiming VAT on eligible expenses, you improve cash flow and reduce costs, making VAT management a key part of running a successful business.