Who can claim a VAT refund and what you need to know first

You can claim a VAT refund in the UK if you are a business registered for VAT and you have paid VAT on purchases that you can reclaim — typically goods and services used for your business. The most common scenario is when your VAT paid on purchases (input tax) exceeds the VAT you have collected from customers (output tax) in a given period. HMRC (Her Majesty's Revenue and Customs) will refund the difference, though the process and timeline depend on whether you are claiming within the UK system or as a foreign business.

If you are a UK-registered business, you claim VAT refunds through your VAT return, which you file every three months (or monthly if you choose). If you are a foreign business that has paid VAT in the UK, the process is different and involves a separate reclaim procedure. The rules also differ depending on whether you are VAT-registered in another EU country, a non-EU country, or whether you are claiming under the VAT refund scheme for visitors.

Key Takeaways

  • UK-registered businesses claim VAT refunds by reporting input tax on their quarterly VAT return to HMRC, and refunds are paid automatically if input tax exceeds output tax.
  • Foreign businesses can reclaim UK VAT through the VAT refund scheme, but must be registered for VAT in their home country and submit a claim form within the time limit set by UK law.
  • Visitors and tourists can reclaim VAT on goods purchased in the UK if they export those goods outside the UK within three months, using the Retail Export Scheme or a VAT refund service.
  • You must keep all invoices, receipts, and proof of export or business use for at least six years, as HMRC may ask to see them.
  • Refund timelines vary: UK businesses typically receive refunds within 30 days of filing their return, while foreign business claims can take several months.

How UK-registered businesses claim VAT refunds through their quarterly return

If your business is registered for VAT with HMRC, you report all VAT paid on purchases (input tax) and all VAT collected from customers (output tax) on your VAT return. You file this return every three months using HMRC's online portal, MTD for VAT (Making Tax Digital for VAT). On the return form, you enter the total input tax you have paid and the total output tax you have collected. If input tax is higher, HMRC calculates the refund automatically.

The refund is paid directly into your business bank account, usually within 30 days of HMRC receiving your return. However, HMRC can hold or delay a refund if they decide to carry out a compliance check on your return. If you are a new business or if your refund is unusually large compared to your previous returns, HMRC may ask for supporting documents before releasing the money. Keep all invoices, receipts, and records of business purchases for at least six years in case HMRC requests them.

If you expect a refund but do not receive it within 30 days, log into your HMRC online account and check the status of your return. You can also contact HMRC's VAT helpline to ask about the delay. Do not file another return or resubmit the same claim — this can cause confusion and slow the process further.

How foreign businesses claim VAT refunds in the UK

If you are a business based outside the UK and you have paid VAT on purchases or services in the UK, you may be able to reclaim that VAT. The process depends on which country you are registered for VAT in. If you are registered in another EU country, you can reclaim UK VAT through the VAT refund scheme for foreign businesses. If you are registered in a non-EU country, the rules are different and depend on whether your country has a reciprocal agreement with the UK.

To claim, you must obtain invoices from the UK suppliers showing the VAT charged. These invoices must show your business name, address, and VAT registration number (or tax ID number if you are not VAT-registered). You then submit a claim form to HMRC along with copies of the invoices. The claim form is available on the HMRC website under "VAT refunds for foreign businesses". You must submit the claim within a set time limit — usually within four years of the date the invoice was issued, but some countries have shorter limits, so check with HMRC first.

HMRC will review your claim and contact you if they need more information. Refunds typically take three to six months to process, though this can vary. Once approved, the refund is paid by bank transfer to the account details you provide on the claim form. If your claim is refused, HMRC will explain why and tell you how to appeal.

VAT refunds for visitors and tourists using the Retail Export Scheme

If you are a visitor to the UK and you have purchased goods to take out of the country, you may be able to reclaim the VAT you paid. This is called the Retail Export Scheme. You can only reclaim VAT on goods (not services), and the goods must be exported outside the UK within three months of purchase. You cannot reclaim VAT on goods you consume in the UK or leave behind.

At the time of purchase, tell the shop assistant that you want to reclaim VAT. The shop will give you a VAT refund form (usually a pink or white form) and you must keep your receipt. When you leave the UK, you take the goods, the receipt, and the form to the airport or port. At the customs desk, show the goods to a customs officer, who will stamp your form. You then send the stamped form back to the shop or to a VAT refund service (such as Global Blue or Premier Tax Free), and they will refund the VAT to your credit card or bank account.

Some shops use a different system where a VAT refund service handles the claim on your behalf. In this case, you scan a QR code at the till or the shop gives you a receipt that you can process through the service's app or website. The refund is then paid directly to you. Processing times vary, but most refunds are paid within 14 to 30 days.

What documents and records you need to keep

HMRC requires you to keep records of all VAT transactions for at least six years. For input tax claims, this means keeping invoices from your suppliers showing the VAT charged, the supplier's name and VAT number, the date of the invoice, and a description of what was purchased. The invoice must be an original or a copy certified by the supplier — screenshots or informal receipts are not usually accepted.

For business purchases, you also need to keep records showing how the purchase relates to your business. For example, if you claim VAT on office equipment, keep the invoice and any documentation showing it was used for business purposes. If you claim VAT on fuel or vehicle expenses, keep mileage records or logs showing business use. If HMRC asks to see these records and you cannot produce them, they can refuse your refund claim or reduce the amount you can reclaim.

For foreign business claims, keep copies of all invoices, your claim form, proof of payment (such as bank statements), and any correspondence with HMRC. For visitor refunds, keep your receipt and the stamped VAT refund form until the refund has been processed.

What to do if your VAT refund is delayed or refused

If you have filed your VAT return and expect a refund but have not received it after 30 days, first check your HMRC online account to see if the return has been processed. If it shows as received and processed, but no refund has arrived, contact HMRC's VAT helpline. Have your VAT registration number and the date you filed the return ready. HMRC may tell you that a compliance check is underway or that they need additional information before releasing the refund.

If HMRC refuses your refund claim, they will send you a letter explaining the reason. Common reasons include missing or incomplete invoices, VAT claimed on non-business purchases, or VAT claimed on items that are not normally reclaimable (such as certain entertainment or vehicle purchases). You have the right to appeal HMRC's decision. The appeal process starts with a written request to HMRC asking them to reconsider, and if they refuse again, you can escalate to an independent tax tribunal.

For foreign business claims that are delayed, contact HMRC's International Tax Team. They can tell you the status of your claim and whether additional documents are needed. If your claim is refused, the letter will explain the reason and your right to appeal. Appeals for foreign business claims follow the same process as UK business claims.

Timeline and payment methods for VAT refunds

The time it takes to receive a VAT refund depends on the type of claim and whether HMRC needs to carry out checks. For UK-registered businesses filing a standard quarterly return, refunds are usually paid within 30 days. If HMRC carries out a compliance check, this can extend to 60 days or longer. For foreign business claims, the timeline is typically three to six months, though complex claims or those requiring additional documentation can take longer.

Refunds are paid by bank transfer to the account you have registered with HMRC. For UK businesses, this is the account linked to your VAT registration. For foreign businesses, you provide the bank account details on your claim form. Make sure the account details are correct, as HMRC will not resend a refund if it is paid to the wrong account — you would need to contact your bank to trace it.

For visitor VAT refunds, the payment method depends on the refund service or shop you used. Most services offer refund by credit card, debit card, or bank transfer. Some offer cash refunds at the airport, though this is less common. Check with the refund service about their payment options and processing times when you submit your claim.

Frequently Asked Questions

Can I claim VAT refunds if I am not registered for VAT?

If you are a UK business with turnover below the VAT threshold (currently £85,000 per year), you are not required to register for VAT and cannot reclaim VAT on purchases. However, you can choose to register voluntarily if you expect to reclaim more VAT than you collect. If you are a foreign business, you must be registered for VAT in your home country to reclaim UK VAT.

What happens if I claim VAT on something I should not have?

If you have claimed VAT on a purchase that is not reclaimable (such as a personal expense or entertainment), HMRC may ask you to repay the VAT plus interest and penalties if they discover it during a check. It is better to correct the error yourself by amending your VAT return as soon as you notice it. HMRC is usually more lenient if you report the error before they find it.

Can I reclaim VAT on a purchase made before I registered for VAT?

No, you can only reclaim VAT on purchases made after your VAT registration date. If you made business purchases before registering, you cannot reclaim the VAT on those items. However, if you registered for VAT and then made a purchase on the same day or shortly after, you may be able to reclaim it if you can show the invoice is dated after your registration took effect.

How do I reclaim VAT if I have moved to the UK from another country?

If you have moved to the UK and started a business, you need to register for VAT with HMRC if your turnover exceeds the threshold. Once registered, you can reclaim VAT on purchases made after your registration date. If you paid VAT on business purchases before registering, you cannot reclaim that VAT. If you are still registered for VAT in your previous country, you may also be able to reclaim UK VAT through the foreign business refund scheme.

What if I paid VAT in cash and do not have an invoice?

HMRC requires an invoice to support any VAT refund claim. If you paid cash and do not have an invoice, contact the supplier and ask for one. If the supplier cannot provide an invoice, you cannot reclaim the VAT. This is why it is important to always ask for an invoice at the time of purchase, even for small cash transactions.