Recovering UK VAT: A guide for non-UK businesses

Sometimes, businesses are not liable to register for UK VAT, this means that recovery of local VAT through a UK VAT return is not available. Instead, relief may be sought through use of HMRC’s Overseas Business Refund Scheme, provided the applicable conditions are satisfied.

This article explains the principal conditions, practical requirements and common risks for businesses seeking to recover UK VAT under this scheme. The rules discussed apply to supplies made on or after 1 January 2021 and should be considered alongside the specific facts and supporting records for each claim.

Who can use the refund scheme?

A business established outside the UK may make a claim if it is registered for business purposes in another country and satisfies all of the relevant eligibility conditions.

The claimant must:

• have no place of business or other residence in the UK
• not be registered, liable or eligible to register for UK VAT
• generally, make no supplies in the UK, except for limited categories such as supplies where the UK recipient accounts for the UK VAT due under the reverse charge, and
• be established in a country that allows comparable VAT refunds to UK businesses.

The scheme is therefore not an alternative to VAT registration. A non-established business making taxable supplies in the UK may have a registration obligation from its first supply, subject to the place of supply and liability rules. Businesses should confirm their UK VAT registration position first before preparing a refund claim. This is particularly important, in our view, where they import and sell goods, hold stock, undertake installations or carry out activities at UK events.

What VAT can be recovered?

The scheme permits recovery of UK VAT charged on imports and on purchases of goods or services used for the claimant’s business activities. The expenditure must have a sufficient business purpose and be attributable to activities that would support input tax recovery if carried on in the UK.

Businesses are not automatically entitled to input tax recovery when UK VAT is charged on the goods and services it purchases. A claimant should first establish whether UK VAT was correctly charged by their suppliers. Incorrectly charged VAT should normally be recovered from the supplier rather than claimed from HMRC.

Claim period and deadline

The refund scheme operates on a prescribed claim year running from 1 July to 30 June. Claims must be submitted to HMRC by 31 December following the end of the relevant claim year.  For example, if you want to claim UK VAT incurred between July 2025 – June 2026, a claim must be made and submitted to HMRC by 31 December 2026.

Businesses may submit a claim for the full year or, provided the scheme conditions are met and the amount of VAT being claimed exceeds £130, for a shorter period of at least three consecutive months. Given that late claims are unlikely to be accepted by HMRC, businesses should ensure that supporting documentation is gathered and reviewed well ahead of the submission deadline.

Evidence and supporting documents

A robust claim file will ordinarily include:

• a signed VAT65A form, prepared electronically 
• valid VAT invoices and, where relevant, import declarations in the claimant’s name
• a certificate from the claimant’s home tax authority confirming its business status
• a schedule reconciling each item claimed to the supporting invoice or import document
• evidence and explanation of the business’ activities and purpose of the expenditure where this is not apparent
• details of an authorised representative where an agent submits or manages the claim.

The claimant should retain original records and be prepared to provide further information if HMRC reviews eligibility, the treatment of particular supplies or the link between the expenditure and the claimant’s business activities.

Common issues

• Overlooking a UK registration obligation: making UK taxable supplies can remove the business from the refund scheme and may create an immediate registration requirement.
• Claiming VAT that was incorrectly charged: the appropriate remedy may be to obtain a credit note or revised invoice from your supplier.
• Using incomplete invoices: documents that do not meet UK VAT invoicing requirements may be rejected.
• Lack of all the required documentation: delays in obtaining a certificate of status or relevant import evidence can result in the claim being rejected.

How can Crowe UK Help?

The UK’s VAT refund scheme for overseas businesses can provide valuable relief where UK VAT represents a genuine business cost but cannot be recovered through a UK VAT return. However, businesses must ensure that all of the conditions are met before making a claim to HMRC.

Early review of the supply chain, establishment position, invoice treatment and supporting evidence can reduce delays and improve the likelihood of a successful claim.

If you would like support in reviewing your VAT position, please get in touch with your usual Crowe contact.