VAT refunds can now be paid to overseas bank accounts thanks to an update to HMRC’s banking system. Entering details in the system isn’t always easy, however.
The result of Brexit has been an increase in overseas businesses registering for VAT in the UK. The aim is to increase revenue through the VAT system. However, there are scenarios in which the overseas business is entitled to a VAT refund.
A taxpayer who owes HMRC money can make an electronic payment from any bank in the world. In the past, however, HMRC only refunded VAT to UK bank accounts since its banking system could only accept UK sort codes and bank account numbers, which meant that overseas bank accounts could not work with online or paper forms such as VAT484.
HMRC now allows businesses with overseas bank accounts to receive refunds to overseas banks. The growth in overseas traders registered for UK VAT is the main reason for this.
The process is not so straightforward, however, as is typical of HMRC.
Gateway entry
Using the taxpayer’s government portal is the only way to access this process. Agents cannot log in to it. Sharing this article with the taxpayer will help them better understand and follow important details on the HMRC portal.
These three stages should be followed by a taxpayer who is unable to do this on their own.
Stage 1
Obtain approval/authorisation from the taxpayer for the agent to log in to their client portal. An email is sufficient.
Stage 2
To access the client’s government gateway, you must use the government gateway login page and log in with the taxpayer’s credentials. You cannot use the link in your favourites to log in. After the two-step security has been completed, you will be presented with a series of questions.
You must log in using the above link because no PDF form or menu option will take you to the next stage – you need to use the above link to complete the process. It is not possible to provide overseas bank details when you use the normal login page/link. Instead, you can change the UK bank details only.
In the same way, you cannot access the Postponed Import VAT Statements through the normal login; you must click on a link that takes you to a login page that then opens the Postponed Import VAT Statements.
Government.uk has more information on VAT refunds. This is the official HMRC page where the correct link can be found, so it makes sense to bookmark this page. A question for another day is how an overseas taxpayer would find this information without assistance or luck.
Stage 3
The next step is to confirm the VAT number (remember you are now logged into their account as the taxpayer).
The next question asks for the business address, which must be an international address, not a UK address. The screen will not allow you to proceed to the next screen if the taxpayer only has an overseas bank account but has a UK address.
The HM Revenue & Customs may be unaware that UK entities with overseas directors often have difficulty obtaining a UK bank account, due to banking regulations and risk profiles.
The next screen asks the user to confirm who is completing the form. As there is no option for “agent” there is further reason to make sure taxpayer permission is given before the agent attempts to login and perform this process.
The taxpayer will be asked if they have uncashed payable orders (cheques) they wish to cancel and have refunded to their overseas bank account instead. The next screen asks for the IBAN details of the bank account or if the IBAN is unknown, there is an area where you can manually enter the details.
Lastly, the process concludes with a summary screen and approval/submission of the form. HMRC will process the submission manually, ensuring that all future refunds will be made to the overseas bank and cancelling/refunding any historical payable orders.
Be prepared
Since the process itself is fairly simple, and the questions asked are not complicated, it helps to have the answers to all of the questions before logging in, so that the objective can be accomplished in one visit.
Get in touch with UK-Accountant for further advice or assistance with your VAT refunds for your business.
Further Read